After looking at Abterra Ltd’s (SGX:L5I) latest earnings announcement (30 September 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 pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Abterra’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Abterra
Could L5I beat the long-term trend and outperform its industry?
I like to 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 examine different companies in a uniform manner using the latest information. For Abterra, its most recent twelve-month earnings is -SGD20.9M, which, relative to the prior year’s figure, has become less negative. Given that these values are fairly nearsighted, I have determined an annualized five-year figure for L5I’s net income, which stands at -SGD20.8M. This shows that, Abterra has historically performed better than recently, despite the fact that it seems like earnings are now heading back towards a more favorable position once more.
We can further assess Abterra’s loss by researching 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 few years has been negative at -25.58%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the SG trade distributors industry has been growing, albeit, at a subdued single-digit rate of 8.95% over the previous twelve months, . This is a turnaround from a volatile drop of -4.31% in the previous few years. This shows that, although Abterra is currently loss-making, it may have only just gained from the recent industry expansion, moving earnings towards to right direction.
What does this mean?
Though Abterra’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most insightful step is to examine company-specific issues Abterra may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Abterra to get a better picture of the stock by looking at: