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Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Swee Hong Limited’s (SGX:QF6) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Swee Hong

How Well Did QF6 Perform?

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend enables me to examine different companies in a uniform manner using the latest information. For Swee Hong, its most recent bottom-line (trailing twelve month) is S$3.05M, which, against the previous year’s level, has sunken by a significant -89.32%. Given that these figures may be somewhat short-term thinking, I have determined an annualized five-year value for QF6’s earnings, which stands at -S$3.63M This means that even though earnings declined from the previous year, over time, Swee Hong’s profits have been increasing on average.

How has it been able to do this? Let’s take a look at whether it is solely because of an industry uplift, or if Swee Hong has experienced some company-specific growth. In the past couple of years, Swee Hong expanded bottom-line, while its top-line fell, by successfully managing its costs. This resulted in to a margin expansion and profitability over time. Scanning growth from a sector-level, the SG construction industry has been enduring some headwinds over the previous few years, leading to an average earnings drop of -7.61% in the most recent year. This means any headwind the industry is facing, it’s hitting Swee Hong harder than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I suggest you continue to research Swee Hong to get a better picture of the stock by looking at:

• 1. Financial Health: Is QF6’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.

• 2. 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 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.