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Measuring Lai Sun Garment (International) Limited’s (HKG:191) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 191’s recent performance announced on 31 January 2018 and compare these figures to its historical trend and industry movements.
See our latest analysis for Lai Sun Garment (International)
Could 191 beat the long-term trend and outperform its industry?
191’s trailing twelve-month earnings (from 31 January 2018) of HK$1.46b has jumped 83.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -9.6%, indicating the rate at which 191 is growing has accelerated. What’s enabled this growth? Let’s see whether it is only due to an industry uplift, or if Lai Sun Garment (International) has experienced some company-specific growth.
Over the past few years, Lai Sun Garment (International) top-line expansion has outstripped earnings and the growth rate of expenses. Though this has caused a margin contraction, it has softened Lai Sun Garment (International)’s earnings contraction.
Eyeballing growth from a sector-level, the HK real estate industry has been growing its average earnings by double-digit 48.1% in the past twelve months, and a less exciting 7.6% over the past half a decade. This growth is a median of profitable companies of 25 Real Estate companies in HK including Sino Harbour Holdings Group, Tian An China Investments and Chuang’s China Investments. This suggests that any tailwind the industry is enjoying, Lai Sun Garment (International) is capable of leveraging this to its advantage.
In terms of returns from investment, Lai Sun Garment (International) has fallen short of achieving a 20% return on equity (ROE), recording 8.0% instead. Furthermore, its return on assets (ROA) of 3.6% is below the HK Real Estate industry of 3.7%, indicating Lai Sun Garment (International)’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Lai Sun Garment (International)’s debt level, has increased over the past 3 years from 1.3% to 3.5%.
What does this mean?
Though Lai Sun Garment (International)’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Lai Sun Garment (International) to get a better picture of the stock by looking at: