Today I will examine China Beidahuang Industry Group Holdings Limited’s (SEHK:39) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of 39’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for China Beidahuang Industry Group Holdings
Did 39’s recent EPS Growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, 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 method enables me to analyze different companies in a uniform manner using new information. For China Beidahuang Industry Group Holdings, the latest earnings -HK$5.3M, which, in comparison to the prior year’s figure, has become less negative. Since these figures are fairly nearsighted, I have determined an annualized five-year value for China Beidahuang Industry Group Holdings’s net income, which stands at -HK$59.3M. This means that, although net income is negative, it has become less negative over the years.
Additionally, we can assess China Beidahuang Industry Group Holdings’s loss by researching what has been happening in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last few years has risen by 16.37%, indicating that China Beidahuang Industry Group Holdings is in a high-growth period with expenses shooting ahead of high top-line growth rates. Eyeballing growth from a sector-level, the HK retail distributors industry has been growing its average earnings by double-digit 12.03% over the prior year, . This is a change from a volatile drop of -2.54% in the last few years. This means although China Beidahuang Industry Group Holdings is presently unprofitable, it may have only just gained from the recent industry expansion, moving earnings towards to right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to envisage what will occur going forward, and when. The most useful step is to examine company-specific issues China Beidahuang Industry Group Holdings may be facing and whether management guidance has consistently been met in the past. You should continue to research China Beidahuang Industry Group Holdings to get a better picture of the stock by looking at: