Assessing Dining Concepts Holdings Limited’s (SEHK:8056) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Dining Concepts Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its hotels, restaurants and leisure industry peers. See our latest analysis for 8056
Were 8056’s earnings stronger than its past performances and the industry?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This method enables me to assess many different companies on a similar basis, using the latest information. For Dining Concepts Holdings, the most recent earnings -HK$4.0M, which compared to the prior year’s level, has become less negative. Since these values are somewhat myopic, I’ve computed an annualized five-year figure for 8056’s net income, which stands at -HK$0.9M. This shows that, Dining Concepts Holdings has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further assess Dining Concepts Holdings’s loss by looking at what’s going on in the industry on top of within the company. First, I want to briefly look into the line items. Revenue growth over past couple of years has risen by a mere 6.53%. Since top-line growth is also pretty flat, the key to profitability going forward would be managing cost growth rates. Looking at growth from a sector-level, the HK hotels, restaurants and leisure industry has been growing, albeit, at a subdued single-digit rate of 7.36% in the prior year, . This is a turnaround from a volatile drop of -4.74% in the previous few years. This shows that, while Dining Concepts Holdings is presently loss-making, it may have only just been aided by the recent industry expansion, moving earnings towards to right direction.
What does this mean?
Though Dining Concepts Holdings’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to envisage what will happen in the future and when. The most useful step is to assess company-specific issues Dining Concepts Holdings may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Dining Concepts Holdings to get a better picture of the stock by looking at: