After reading PICC Property and Casualty Company Limited’s (SEHK:2328) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether PICC Property and Casualty’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. See our latest analysis for PICC Property and Casualty
Did 2328’s recent earnings 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 assess various companies in a uniform manner using new information. “For PICC Property and Casualty, its “, latest earnings is CN¥19,455.0M, which compared to last year’s level, has grown by a fairly soft 7.65%. Given that these values may be fairly short-term thinking, I have calculated an annualized five-year value for 2328’s net income, which stands at CN¥13,461.6M. This shows that, on average, PICC Property and Casualty has been able to steadily grow its bottom line over the past couple of years as well.
What’s enabled this growth? Well, let’s take a look at whether it is merely owing to industry tailwinds, or if PICC Property and Casualty has experienced some company-specific growth. In the last few years, PICC Property and Casualty increased its bottom line faster than revenue by successfully controlling its costs. This has caused a margin expansion and profitability over time. Viewing growth from a sector-level, the HK insurance industry has been growing its average earnings by double-digit 22.56% in the previous year, and 10.35% over the past couple of years. This means that whatever tailwind the industry is profiting from, PICC Property and Casualty has not been able to gain as much as its industry peers.
What does this mean?
Though PICC Property and Casualty’s past data is helpful, it is only one aspect of my investment thesis. While PICC Property and Casualty has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research PICC Property and Casualty to get a more holistic view of the stock by looking at: