Assessing Mongolia Energy Corporation Limited’s (SEHK:276) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 276’s recent performance announced on 30 September 2017 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for Mongolia Energy
Commentary On 276’s Past Performance
I like to 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 enables me to assess different stocks in a uniform manner using new information. Mongolia Energy’s latest twelve-month earnings -HK$247.3M, which, in comparison to the previous year’s level, has become less negative. Given that these figures are somewhat short-term, I’ve calculated an annualized five-year figure for 276’s earnings, which stands at -HK$2,586.1M. This means even though net income is negative, it has become less negative over the years.
Additionally, we can assess Mongolia Energy’s loss by looking at 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 past couple of years has rose by 65.86%, implying that Mongolia Energy is in a high-growth period with expenses racing ahead elevated top-line growth rates. Looking at growth from a sector-level, the HK oil and gas industry has been ramping up average earnings growth of 54.48% over the previous year, . This is a a substantial turnaround from a volatile drop of -4.69% in the past couple of years. This means even though Mongolia Energy is presently running a loss, it may have only just gained from the recent industry expansion, moving earnings in the right direction.
What does this mean?
Mongolia Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to examine company-specific issues Mongolia Energy may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Mongolia Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is 276’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.