After looking at Solargiga Energy Holdings Limited’s (SEHK:757) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Solargiga Energy Holdings’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Solargiga Energy Holdings
Was 757’s recent earnings decline worse than the long-term trend and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to analyze different stocks on a more comparable basis, using the most relevant data points. For Solargiga Energy Holdings, its most recent twelve-month earnings is -CN¥94.3M, which, in comparison to the previous year’s level, has become more negative. Since these values are somewhat nearsighted, I have estimated an annualized five-year value for 757’s net income, which stands at -CN¥226.5M. This suggests that, even though net income is negative, it has become less negative over the years.
Additionally, we can assess Solargiga Energy Holdings’s loss by looking at what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the last couple of years has increased by 10.21%, implying that Solargiga Energy Holdings is in a high-growth phase with expenses racing ahead high top-line growth rates, leading to yearly losses. Inspecting growth from a sector-level, the HK semiconductors and semiconductor equipment industry has been growing its average earnings by double-digit 16.48% over the previous twelve months, and a more muted 6.51% over the previous five years. This suggests that whatever uplift the industry is deriving benefit from, Solargiga Energy Holdings has not been able to leverage it as much as its average peer.
What does this mean?
Solargiga Energy Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most valuable step is to assess company-specific issues Solargiga Energy Holdings may be facing and whether management guidance has dependably been met in the past. You should continue to research Solargiga Energy Holdings to get a better picture of the stock by looking at: