In This Article:
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Asia Energy Logistics Group Limited (SEHK:351) useful as an attempt to give more color around how Asia Energy Logistics Group is currently performing. Check out our latest analysis for Asia Energy Logistics Group
Did 351’s recent earnings growth beat the long-term trend and the 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 technique allows me to assess different companies on a similar basis, using new information. For Asia Energy Logistics Group, its most recent earnings (trailing twelve month) is -HK$62.00M, which, in comparison to last year’s level, has become less negative. Given that these figures may be relatively short-term thinking, I’ve computed an annualized five-year figure for Asia Energy Logistics Group’s net income, which stands at -HK$158.33M. This means while net income is negative, it has become less negative over the years.
We can further assess Asia Energy Logistics Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Asia Energy Logistics Group has seen an annual decline in revenue of -36.41%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Eyeballing growth from a sector-level, the HK infrastructure industry has been growing its average earnings by double-digit 20.31% in the previous twelve months, and a less exciting 4.65% over the last five years. This shows that, although Asia Energy Logistics Group is currently running a loss, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Asia Energy Logistics Group may be facing and whether management guidance has steadily been met in the past. You should continue to research Asia Energy Logistics Group to get a more holistic view of the stock by looking at: