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After looking at Beijing Sports and Entertainment Industry Group Limited’s (SEHK:1803) latest earnings announcement (30 June 2017), 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 Beijing Sports and Entertainment Industry Group
How Well Did 1803 Perform?
For the most up-to-date info, I use data from the most recent 12 months, 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 analyze various companies on a more comparable basis, using the latest information. For Beijing Sports and Entertainment Industry Group, its most recent trailing-twelve-month earnings is -HK$51.08M, which, in comparison to the previous year’s level, has become more negative. Given that these figures are relatively nearsighted, I have estimated an annualized five-year figure for 1803’s net income, which stands at HK$36.38M.
We can further assess Beijing Sports and Entertainment Industry Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Beijing Sports and Entertainment Industry Group has seen an annual decline in revenue of -11.52%, 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 logistics industry has been enduring some headwinds over the last few years, leading to an average earnings drop of -9.04% in the most recent year. This shows that any recent the industry is enduring, it’s hitting Beijing Sports and Entertainment Industry Group harder than its peers.
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 envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Beijing Sports and Entertainment Industry Group may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Beijing Sports and Entertainment Industry Group to get a better picture of the stock by looking at: