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Today I will take a look at Anhui Expressway Company Limited’s (SEHK:995) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the infrastructure industry performed. As an investor, I find it beneficial to assess 995’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. Check out our latest analysis for Anhui Expressway
How 995 fared against its long-term earnings performance and its industry
For the most up-to-date info, I 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 allows me to examine various companies in a uniform manner using new information. For Anhui Expressway, its latest trailing-twelve-month earnings is CN¥1.06B, which, relative to the previous year’s figure, has risen by 13.07%. Given that these values may be somewhat short-term, I have created an annualized five-year value for Anhui Expressway’s net income, which stands at CN¥878.70M This suggests that, generally, Anhui Expressway has been able to consistently improve its profits over the last few years as well.
How has it been able to do this? Let’s see whether it is solely attributable to industry tailwinds, or if Anhui Expressway has seen some company-specific growth. Over the last few years, Anhui Expressway expanded its bottom line faster than revenue by efficiently controlling its costs. This brought about a margin expansion and profitability over time. Eyeballing growth from a sector-level, the HK infrastructure industry has been growing its average earnings by double-digit 21.12% in the prior year, and a flatter -0.47% over the past five. This means in the recent industry expansion, Anhui Expressway has not been able to realize the gains unlike its average peer.
What does this mean?
Though Anhui Expressway’s past data is helpful, it is only one aspect of my investment thesis. While Anhui Expressway has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Anhui Expressway to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for 995’s future growth? Take a look at our free research report of analyst consensus for 995’s outlook.
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2. Financial Health: Is 995’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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3. 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 September 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.