In This Article:
In this commentary, I will examine Sinotruk (Hong Kong) Limited's (SEHK:3808) latest earnings update (30 June 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the machinery industry performed. As an investor, I find it beneficial to assess 3808’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
See our latest analysis for Sinotruk (Hong Kong)
Commentary On 3808's Past Performance
3808's trailing twelve-month earnings (from 30 June 2019) of CN¥4.4b has increased by 9.3% 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 58%, indicating the rate at which 3808 is growing has slowed down. To understand what's happening, let's examine what's going on with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Sinotruk (Hong Kong) has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 6.8% exceeds the HK Machinery industry of 5.2%, indicating Sinotruk (Hong Kong) has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Sinotruk (Hong Kong)’s debt level, has increased over the past 3 years from 2.8% to 21%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 44% to 5.6% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Sinotruk (Hong Kong) has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Sinotruk (Hong Kong) 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 3808’s future growth? Take a look at our free research report of analyst consensus for 3808’s outlook.
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Financial Health: Are 3808’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 30 June 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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