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Examining Huge China Holdings Limited’s (SEHK:428) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 428’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Huge China Holdings
Commentary On 428’s Past Performance
To account for any quarterly or half-yearly updates, 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 enables me to analyze different stocks in a uniform manner using new information. For Huge China Holdings, its latest trailing-twelve-month earnings is -HK$205.51M, which, against last year’s figure, has become more negative. Since these figures may be relatively short-term thinking, I have computed an annualized five-year figure for 428’s earnings, which stands at -HK$19.71M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further assess Huge China Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Huge China Holdings has seen an annual decline in revenue of -15.60%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the HK capital markets industry has been growing its average earnings by double-digit 12.13% over the past twelve months, and 15.17% over the past half a decade. This means any tailwind the industry is deriving benefit from, Huge China Holdings has not been able to reap as much as its average peer.
What does this mean?
Though Huge China Holdings’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Huge China Holdings may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Huge China Holdings to get a better picture of the stock by looking at:
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Financial Health: Is 428’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.