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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine China Netcom Technology Holdings Limited’s (SEHK:8071) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for China Netcom Technology Holdings
How Well Did 8071 Perform?
I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend allows me to assess many different companies on a more comparable basis, using the most relevant data points. For China Netcom Technology Holdings, its most recent bottom-line (trailing twelve month) is -HK$48.29M, which, in comparison to last year’s level, has become more negative. Given that these values may be relatively short-term, I have calculated an annualized five-year value for 8071’s net income, which stands at -HK$265.16M. This means that, while net income is negative, it has become less negative over the years.
We can further examine China Netcom Technology Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years China Netcom Technology Holdings’s top-line has grown by 26.46% on average, indicating that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the HK hospitality industry has been growing its average earnings by double-digit 20.98% in the past twelve months, . This is a change from a volatile drop of -4.35% in the last few years. This shows that any tailwind the industry is profiting from, China Netcom Technology Holdings has not been able to leverage it as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to assess company-specific issues China Netcom Technology Holdings may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research China Netcom Technology Holdings to get a more holistic view of the stock by looking at:
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Financial Health: Is 8071’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 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.