Today I will take a look at HKT Trust and HKT Limited’s (SEHK:6823) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the telecom industry performed. As an investor, I find it beneficial to assess 6823’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. See our latest analysis for HKT Trust and HKT

Were 6823’s earnings stronger than its past performances and the industry?

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 enables me to analyze many different companies on a more comparable basis, using the most relevant data points. For HKT Trust and HKT, its latest trailing-twelve-month earnings is HK$5.10B, which compared to the previous year’s level, has increased by a relatively subdued 4.25%. Given that these figures are fairly short-term, I’ve estimated an annualized five-year figure for HKT Trust and HKT’s net income, which stands at HK$3.02B This means that, on average, HKT Trust and HKT has been able to consistently grow its bottom line over the past couple of years as well.

What’s the driver of this growth? Well, let’s take a look at if it is only owing to an industry uplift, or if HKT Trust and HKT has seen some company-specific growth. In the past couple of years, HKT Trust and HKT expanded its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Viewing growth from a sector-level, the HK telecom industry has been growing, albeit, at a muted single-digit rate of 4.20% in the past twelve months, and 3.47% over the last five years. This means any recent headwind the industry is experiencing, HKT Trust and HKT is relatively better-cushioned than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research HKT Trust and HKT to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 6823’s future growth? Take a look at our free research report of analyst consensus for 6823’s outlook.

2. Financial Health: Is 6823’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.

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 31 December 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.