In This Article:
Understanding how Yunfeng Financial Group Limited (HKG:376) is performing as a company requires looking at more than just a years’ earnings. Today I will run you through a basic sense check to gain perspective on how Yunfeng Financial Group is doing by comparing its latest earnings with its long-term trend as well as the performance of its capital markets industry peers.
Check out our latest analysis for Yunfeng Financial Group
Did 376’s recent performance beat its trend and industry?
376 is loss-making, with the most recent trailing twelve-month earnings of -HK$329m (from 30 June 2018), which compared to last year has become less negative. Furthermore, the company’s loss seem to be growing over time, with the five-year earnings average of -HK$49m. Each year, for the past five years 376 has seen an annual decline in revenue of -28%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Scanning growth from a sector-level, the HK capital markets industry has been growing, albeit, at a unexciting single-digit rate of 2.5% in the prior year, and 9.3% over the past five. This growth is a median of profitable companies of 25 Capital Markets companies in HK including Astrum Financial Holdings, Pinestone Capital and Future World Financial Holdings. This means that any recent headwind the industry is experiencing, it’s hitting Yunfeng Financial Group harder than its peers.
Even though Yunfeng Financial Group is currently unprofitable, it has an ample cash cushion (HK$3.5b) to pay for its upcoming operating expenses over the next couple of years. This is a strong indication of good cash management.
What does this mean?
Though Yunfeng Financial Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Yunfeng Financial Group may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Yunfeng Financial Group to get a more holistic view of the stock by looking at:
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Financial Health: Are 376’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.