In This Article:
After looking at Yangzijiang Shipbuilding (Holdings) Ltd’s (SGX:BS6) latest earnings update (30 September 2018), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.
Check out our latest analysis for Yangzijiang Shipbuilding (Holdings)
Were BS6’s earnings stronger than its past performances and the industry?
BS6’s trailing twelve-month earnings (from 30 September 2018) of CN¥3.0b has increased by 6.5% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -6.2%, indicating the rate at which BS6 is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is only because of an industry uplift, or if Yangzijiang Shipbuilding (Holdings) has experienced some company-specific growth.
In terms of returns from investment, Yangzijiang Shipbuilding (Holdings) has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 7.0% exceeds the SG Machinery industry of 5.4%, indicating Yangzijiang Shipbuilding (Holdings) has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Yangzijiang Shipbuilding (Holdings)’s debt level, has declined over the past 3 years from 14% to 12%.
What does this mean?
Yangzijiang Shipbuilding (Holdings)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Yangzijiang Shipbuilding (Holdings) to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for BS6’s future growth? Take a look at our free research report of analyst consensus for BS6’s outlook.
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Financial Health: Are BS6’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.