After reading Boill Healthcare Holdings Limited’s (SEHK:1246) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 Boill Healthcare Holdings
Was 1246’s recent earnings decline worse than the long-term trend and the industry?
For the most up-to-date info, I 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 blend allows me to examine various companies on a more comparable basis, using new information. Boill Healthcare Holdings’s most recent earnings -HK$410.8M, which compared to the prior year’s level, has become more negative. Since these figures are relatively short-term thinking, I have determined an annualized five-year figure for Boill Healthcare Holdings’s net income, which stands at -HK$100.7M. This doesn’t seem to paint a better picture, since earnings seem to have gradually been getting more and more negative over time.
Additionally, we can evaluate Boill Healthcare Holdings’s loss by researching what has been happening in the industry on top of within the company. Initially, I want to briefly look into the line items. Revenue growth over past couple of years has increased by a mere 8.96%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be managing costs. Scanning growth from a sector-level, the HK construction and engineering industry has been enduring some headwinds over the prior year, leading to average earnings dropping by more than half. This is a a notable change, given that the industry has been delivering a relatively flat growth rate over the past couple of years. This shows that any recent headwind the industry is facing, it’s hitting Boill Healthcare Holdings harder than its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to envisage what will occur going forward, and when. The most valuable step is to assess company-specific issues Boill Healthcare Holdings may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Boill Healthcare Holdings to get a better picture of the stock by looking at: