Examining how GT Group Holdings Limited (SEHK:263) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how GT Group Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its capital markets industry peers. See our latest analysis for GT Group Holdings
Were 263’s earnings stronger than its past performances and the industry?
I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to analyze various companies on a similar basis, using the latest information. For GT Group Holdings, its most recent earnings is -HK$750.2M, which compared to the previous year’s level, has become less negative. Given that these values may be somewhat short-term, I’ve computed an annualized five-year value for 263’s net income, which stands at -HK$218.7M. This suggests that, GT Group Holdings has historically performed better than recently, even though it seems like earnings are now heading back towards to right direction again.
Additionally, we can examine GT Group Holdings’s loss by looking at what has been happening in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -57.97%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the HK capital markets industry has been relatively flat in terms of earnings growth over the prior twelve months, settling down from a solid 14.23% over the past couple of years. This means that even though GT Group Holdings is currently loss-making, any recent headwind the industry is facing, GT Group Holdings is less exposed compared to its peers.
What does this mean?
Though GT Group Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most useful step is to assess company-specific issues GT Group Holdings may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research GT Group Holdings to get a more holistic view of the stock by looking at:
1. Financial Health: Is 263’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.