Examining CITIC Resources Holdings Limited’s (SEHK:1205) 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 1205’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. View our latest analysis for CITIC Resources Holdings

How 1205 fared against its long-term earnings performance and its industry

I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to assess different companies in a uniform manner using new information. For CITIC Resources Holdings, its latest trailing-twelve-month earnings is HK$518.32M, which compared to last year’s level, has increased by 42.79%. Since these values may be relatively myopic, I’ve estimated an annualized five-year value for 1205’s net income, which stands at -HK$738.94M This suggests that, generally, CITIC Resources Holdings has been able to gradually improve its profits over the last couple of years as well.

How has it been able to do this? Well, let’s take a look at if it is solely a result of industry tailwinds, or if CITIC Resources Holdings has seen some company-specific growth. Over the last few years, although bottom-line growth has seen a decline, top-line growth has dropped at a faster rate, bringing about a margin expansion and CITIC Resources Holdings still maintaining profitability. Viewing growth from a sector-level, the HK trade distributors industry has been growing its average earnings by double-digit 23.75% in the previous year, and 11.90% over the past half a decade. This suggests that whatever uplift the industry is profiting from, CITIC Resources Holdings is able to leverage this to its advantage.

What does this mean?

Though CITIC Resources Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as CITIC Resources Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research CITIC Resources 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.