After looking at Myanmar Metals Limited’s (ASX:MYL) latest earnings announcement (30 June 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 tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for MYL
Commentary On MYL’s Past Performance
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to assess many different companies in a uniform manner using the latest information. Myanmar Metals’s most recent twelve-month earnings -A$5.0M, which compared to the previous year’s level, has become more negative. Given that these values are relatively short-term, I’ve computed an annualized five-year value for Myanmar Metals’s net income, which stands at -A$2.1M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.
Additionally, we can analyze Myanmar Metals’s loss by looking at what’s going on in the industry on top of within the company. First, I want to quickly look into the line items. Revenue growth over past few years has been negative at -4.27%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a muted single-digit rate of 6.76% in the previous twelve months, and a substantial 10.06% over the previous five years. This shows that any uplift the industry is enjoying, Myanmar Metals has not been able to leverage it as much as its industry peers.
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 hard to predict what will happen in the future and when. The most insightful step is to assess company-specific issues Myanmar Metals may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Myanmar Metals to get a better picture of the stock by looking at: