In This Article:
Understanding China Overseas Land & Investment Limited’s (HKG:688) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how China Overseas Land & Investment is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.
Check out our latest analysis for China Overseas Land & Investment
Commentary On 688’s Past Performance
688’s trailing twelve-month earnings (from 30 June 2018) of HK$42.3b has increased by 2.3% 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 14%, indicating the rate at which 688 is growing has slowed down. To understand what’s happening, let’s examine what’s occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, China Overseas Land & Investment has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 5.9% exceeds the HK Real Estate industry of 3.8%, indicating China Overseas Land & Investment has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for China Overseas Land & Investment’s debt level, has declined over the past 3 years from 14% to 12%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 70% to 72% over the past 5 years.
What does this mean?
China Overseas Land & Investment’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While China Overseas Land & Investment has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research China Overseas Land & Investment to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 688’s future growth? Take a look at our free research report of analyst consensus for 688’s outlook.
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Financial Health: Are 688’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.