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We're definitely into long term investing, but some companies are simply bad investments over any time frame. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held Asia Resources Holdings Limited (HKG:899) for five whole years - as the share price tanked 75%. We also note that the stock has performed poorly over the last year, with the share price down 24%. Unhappily, the share price slid 1.3% in the last week.
Check out our latest analysis for Asia Resources Holdings
Asia Resources Holdings hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. Investors will be hoping that Asia Resources Holdings can make progress and gain better traction for the business, before it runs low on cash.
Companies that lack both meaningful revenue and profits are usually considered high risk. The is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Asia Resources Holdings has already given some investors a taste of the bitter losses that high risk investing can cause.
Asia Resources Holdings had net debt of HK$209,161,000 when it last reported in September 2018, according to our data. That puts it in the highest risk category, according to our analysis. But since the share price has dived -24% per year, over 5 years, it looks like some investors think it's time to abandon ship, so to speak. The image below shows how Asia Resources Holdings's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
While the broader market lost about 1.6% in the twelve months, Asia Resources Holdings shareholders did even worse, losing 24%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. However, the loss over the last year isn't as bad as the 24% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.