After looking at Future Bright Mining Holdings Limited’s (SEHK:2212) 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. View our latest analysis for Future Bright Mining Holdings
Was 2212 weak performance lately part of a long-term decline?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to analyze different stocks on a similar basis, using new information. For Future Bright Mining Holdings, its latest earnings is -CN¥15.2M, which, relative to the previous year’s level, has become more negative. Given that these figures may be relatively myopic, I have estimated an annualized five-year value for Future Bright Mining Holdings’s net income, which stands at -CN¥9.6M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
Additionally, we can examine Future Bright Mining Holdings’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the past couple of years has grown by 29.67%, implying that Future Bright Mining Holdings is in a high-growth period with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the HK basic materials industry has been growing its average earnings by double-digit 17.61% in the past year, and a less exciting 5.10% over the previous few years. This means that whatever tailwind the industry is enjoying, Future Bright Mining Holdings has not been able to leverage it as much as its average peer.
What does this mean?
Future Bright Mining Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Future Bright Mining Holdings may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Future Bright Mining Holdings to get a better picture of the stock by looking at: