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Today I will take a look at China Resources and Transportation Group Limited’s (SEHK:269) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the infrastructure industry performed. As an investor, I find it beneficial to assess 269’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for China Resources and Transportation Group
Commentary On 269’s Past Performance
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 blend enables me to assess different companies in a uniform manner using the latest information. For China Resources and Transportation Group, its latest earnings (trailing twelve month) is -HK$1.55B, which, in comparison to the prior year’s figure, has become less negative. Since these figures are somewhat short-term thinking, I’ve determined an annualized five-year figure for 269’s net income, which stands at -HK$1.27B. This means that, China Resources and Transportation Group has historically performed better than recently, although it seems like earnings are now heading back in the right direction again.
We can further examine China Resources and Transportation Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years China Resources and Transportation Group has seen an annual decline in revenue of -2.72%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the HK infrastructure industry has been growing its average earnings by double-digit 21.02% in the past year, and a more subdued 3.81% over the past half a decade. This suggests that, even though China Resources and Transportation Group is currently loss-making, it may have been aided by industry tailwinds, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues China Resources and Transportation Group may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research China Resources and Transportation Group to get a better picture of the stock by looking at: