Was International Standard Resources Holdings Limited’s (HKG:91) Earnings Decline Part Of A Broader Industry Downturn?
When International Standard Resources Holdings Limited (HKG:91) announced its most recent earnings (30 June 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how International Standard Resources Holdings performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 91 has performed.
Check out our latest analysis for International Standard Resources Holdings
Was 91’s weak performance lately a part of a long-term decline?
91 is loss-making, with the most recent trailing twelve-month earnings of -HK$381.7m (from 30 June 2018), which compared to last year has become more negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -HK$327.0m. Each year, for the past five years 91 has seen an annual decline in revenue of -36%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Looking at growth from a sector-level, the HK semiconductor industry has been
Given that International Standard Resources Holdings is currently unprofitable, with operating expenses (opex) growing year-on-year at 4.9%, it may need to raise more cash over the next year. It currently has HK$31m in cash and short-term investments, however, opex (SG&A and one-year R&D) reached HK$53m in the latest twelve months. Even though this is analysis is fairly basic, and International Standard Resources Holdings still can cut its overhead in the near future, or raise debt capital instead of coming to equity markets, the outcome of this analysis still gives us an idea of the company’s timeline and when things will have to start changing, since its current operation is unsustainable.
What does this mean?
Though International Standard Resources 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 predict what will happen in the future and when. The most useful step is to assess company-specific issues International Standard Resources Holdings may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research International Standard Resources Holdings to get a better picture of the stock by looking at:
Financial Health: Are 91’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.
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 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.