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Examining AustChina Holdings Limited’s (ASX:AUH) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess AUH’s latest performance announced on 30 June 2017 and weigh these figures against its longer term trend and industry movements. View our latest analysis for AustChina Holdings
Did AUH’s recent earnings growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use 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 method allows me to assess different companies on a more comparable basis, using the latest information. For AustChina Holdings, its most recent earnings (trailing twelve month) is -AU$1.00M, which, relative to last year’s level, has become less negative. Since these figures are fairly short-term thinking, I’ve computed an annualized five-year value for AUH’s net income, which stands at -AU$6.61M. This suggests that, while net income is negative, it has become less negative over the years.
We can further assess AustChina Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade AustChina Holdings has seen an annual decline in revenue of -52.93%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Inspecting growth from a sector-level, the Australian oil and gas industry has been amplifying growth, more than doubling average earnings over the previous year, and a more subdued 9.50% over the past five years. This suggests that any tailwind the industry is profiting from, AustChina Holdings has not been able to realize the gains unlike its average peer.
What does this mean?
AustChina 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 forecast what will occur going forward, and when. The most useful step is to assess company-specific issues AustChina Holdings may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research AustChina Holdings to get a more holistic view of the stock by looking at the areas below. Just a heads up – to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.