After looking at Vitasoy International Holdings Limited's (SEHK:345) latest earnings announcement (30 September 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Vitasoy International Holdings's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

View our latest analysis for Vitasoy International Holdings

How Well Did 345 Perform?

345's trailing twelve-month earnings (from 30 September 2019) of HK$711m has increased by 0.7% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 12%, indicating the rate at which 345 is growing has slowed down. To understand what's happening, let’s take a look at what’s going on with margins and if the whole industry is facing the same headwind.

In terms of returns from investment, Vitasoy International Holdings has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the HK Food industry of 5.8%, indicating Vitasoy International Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Vitasoy International Holdings’s debt level, has increased over the past 3 years from 22% to 26%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 7.5% to 1.4% over the past 5 years.

What does this mean?

Vitasoy International 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? You should continue to research Vitasoy International Holdings to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 345’s future growth? Take a look at our free research report of analyst consensus for 345’s outlook.

2. Financial Health: Are 345’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.

3. 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.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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