In This Article:
Measuring CGN New Energy Holdings Co Ltd.’s (SEHK:1811) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 1811’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for CGN New Energy Holdings
Despite a decline, did 1811 underperform the long-term trend and the industry?
I use the ‘latest twelve-month’ data, 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 allows me to examine various companies in a uniform manner using the latest information. For CGN New Energy Holdings, its most recent earnings (trailing twelve month) is US$64.33M, which, against the previous year’s figure, has dropped by a significant -36.06%. Given that these values are relatively nearsighted, I have estimated an annualized five-year value for 1811’s net income, which stands at US$103.63M This doesn’t seem to paint a better picture, since earnings seem to have gradually been declining over time.
What could be happening here? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is experiencing the hit as well. Over the past few years, revenue growth has been lagging behind which implies that CGN New Energy Holdings’s bottom line has been driven by unmaintainable cost-reductions. Eyeballing growth from a sector-level, the HK renewable energy industry has been growing, albeit, at a muted single-digit rate of 2.53% in the previous twelve months, and a substantial 11.02% over the last five years. This suggests that any near-term headwind the industry is facing, it’s hitting CGN New Energy Holdings harder than its peers.
What does this mean?
CGN New Energy Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Usually companies that experience an extended period of reduction in earnings are going through some sort of reinvestment phase . Although, if the entire industry is struggling to grow over time, it may be a sign of a structural change, which makes CGN New Energy Holdings and its peers a higher risk investment. You should continue to research CGN New Energy Holdings to get a more holistic view of the stock by looking at:
-
1. Future Outlook: What are well-informed industry analysts predicting for 1811’s future growth? Take a look at our free research report of analyst consensus for 1811’s outlook.
-
2. Financial Health: Is 1811’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
-
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.