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After looking at Gameone Holdings Limited’s (SEHK:8282) latest earnings announcement (31 March 2018), 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. Check out our latest analysis for Gameone Holdings
Was 8282’s recent earnings decline worse than the long-term trend and the industry?
I 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 enables me to analyze different stocks on a similar basis, using the latest information. For Gameone Holdings, its latest earnings (trailing twelve month) is -HK$13.38M, which, in comparison to last year’s figure, has become more negative. Given that these figures may be somewhat short-term, I’ve determined an annualized five-year figure for Gameone Holdings’s earnings, which stands at -HK$4.49M. This doesn’t look much better, since earnings seem to have gradually been getting more and more negative over time.
We can further assess Gameone 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 Gameone Holdings has seen an annual decline in revenue of -3.48%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the HK software industry has been growing its average earnings by double-digit 37.86% in the prior year, and 16.29% over the past five. This means that any uplift the industry is profiting from, Gameone Holdings has not been able to reap as much as its industry peers.
What does this mean?
Though Gameone Holdings’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues Gameone Holdings may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Gameone Holdings to get a better picture of the stock by looking at: