Analyzing Shaw Brothers Holdings Limited’s (SEHK:953) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess 953’s recent performance announced on 30 June 2017 and compare these figures to its long-term trend and industry movements. Check out our latest analysis for Shaw Brothers Holdings
How Did 953’s Recent Performance Stack Up Against Its Past?
I look at 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 allows me to analyze various companies on a similar basis, using the most relevant data points. For Shaw Brothers Holdings, its latest earnings (trailing twelve month) is -CN¥8.9M, which, in comparison to last year’s level, has become less negative. Given that these values may be somewhat myopic, I have estimated an annualized five-year value for Shaw Brothers Holdings’s net income, which stands at -CN¥92.5M. This means although net income is negative, it has become less negative over the years.
We can further analyze Shaw Brothers Holdings’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has been negative at -29.11%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Viewing growth from a sector-level, the HK luxury industry has been growing its average earnings by double-digit 43.31% over the prior year, . This is a change from a volatile drop of -19.66% in the past couple of years. This suggests that, despite the fact that Shaw Brothers Holdings is currently unprofitable, it may have only just been aided by the recent industry expansion, moving earnings in the right direction.
What does this mean?
Shaw Brothers Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most valuable step is to assess company-specific issues Shaw Brothers Holdings may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Shaw Brothers Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is 953’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.