In This Article:
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Today I will examine Tan Chong International Limited's (HKG:693) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of 693'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 Tan Chong International
Were 693's earnings stronger than its past performances and the industry?
693's trailing twelve-month earnings (from 31 December 2018) of HK$601m has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -22%, indicating the rate at which 693 is growing has accelerated. How has it been able to do this? Let's see whether it is solely attributable to an industry uplift, or if Tan Chong International has experienced some company-specific growth.
In terms of returns from investment, Tan Chong International has fallen short of achieving a 20% return on equity (ROE), recording 5.2% instead. Furthermore, its return on assets (ROA) of 3.0% is below the HK Retail Distributors industry of 4.7%, indicating Tan Chong International's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Tan Chong International’s debt level, has declined over the past 3 years from 5.0% to 4.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 20% to 28% over the past 5 years.
What does this mean?
Though Tan Chong International's past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be factors that are influencing the entire industry thus the high industry growth rate over the same period of time. I suggest you continue to research Tan Chong International to get a more holistic view of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for 693’s future growth? Take a look at our free research report of analyst consensus for 693’s outlook.
-
Financial Health: Are 693’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.
-
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.