In This Article:
Understanding how Man King Holdings Limited (HKG:2193) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Man King Holdings is doing by comparing its latest earnings with its long-term trend as well as the performance of its construction industry peers.
See our latest analysis for Man King Holdings
Despite a decline, did 2193 underperform the long-term trend and the industry?
2193’s trailing twelve-month earnings (from 31 March 2018) of HK$7m has declined by -18% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -31%, indicating the rate at which 2193 is growing has slowed down. Why could this be happening? Well, let’s look at what’s occurring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Man King Holdings has fallen short of achieving a 20% return on equity (ROE), recording 2.5% instead. Furthermore, its return on assets (ROA) of 1.7% is below the HK Construction industry of 5.6%, indicating Man King Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Man King Holdings’s debt level, has declined over the past 3 years from 29% to 2.8%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Generally companies that endure a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase However, if the entire industry is struggling to grow over time, it may be a indicator of a structural shift, which makes Man King Holdings and its peers a higher risk investment. I suggest you continue to research Man King Holdings to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 2193’s future growth? Take a look at our free research report of analyst consensus for 2193’s outlook.
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Financial Health: Are 2193’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 March 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.