After looking at M Development Ltd’s (SGX:N14) 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 M Development
How Did N14’s Recent Performance Stack Up Against Its Past?
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 enables me to examine various companies in a uniform manner using the latest information. For M Development, its latest twelve-month earnings is -SGD1.2M, which compared to the prior year’s level, has become less negative. Given that these figures are relatively short-term, I’ve computed an annualized five-year value for M Development’s net income, which stands at -SGD2.0M. This means that, while net income is negative, it has become less negative over the years.
Additionally, we can analyze M Development’s loss by looking at what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -23.01%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the SG diversified financial industry has been growing its average earnings by double-digit 15.33% in the past twelve months, and 11.11% over the past couple of years. This suggests that, despite the fact that M Development is currently unprofitable, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
M Development’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 hard to forecast what will happen in the future and when. The most valuable step is to examine company-specific issues M Development may be facing and whether management guidance has dependably been met in the past. You should continue to research M Development to get a more holistic view of the stock by looking at: