For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Karyon Industries Berhad (KLSE:KARYON). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Karyon Industries Berhad with the means to add long-term value to shareholders.
Check out our latest analysis for Karyon Industries Berhad
Karyon Industries Berhad's Earnings Per Share Are Growing
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That makes EPS growth an attractive quality for any company. Karyon Industries Berhad managed to grow EPS by 12% per year, over three years. That's a pretty good rate, if the company can sustain it.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Karyon Industries Berhad achieved similar EBIT margins to last year, revenue grew by a solid 25% to RM210m. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.
Karyon Industries Berhad isn't a huge company, given its market capitalisation of RM93m. That makes it extra important to check on its balance sheet strength.
Are Karyon Industries Berhad Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So those who are interested in Karyon Industries Berhad will be delighted to know that insiders have shown their belief, holding a large proportion of the company's shares. In fact, they own 45% of the shares, making insiders a very influential shareholder group. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. Of course, Karyon Industries Berhad is a very small company, with a market cap of only RM93m. So this large proportion of shares owned by insiders only amounts to RM42m. That might not be a huge sum but it should be enough to keep insiders motivated!