For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Peking University Resources (Holdings) Company Limited (SEHK:618) useful as an attempt to give more color around how Peking University Resources (Holdings) is currently performing. Check out our latest analysis for Peking University Resources (Holdings)
Could 618 beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I 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 blend allows me to assess different companies in a uniform manner using the most relevant data points. For Peking University Resources (Holdings), its most recent twelve-month earnings is -HK$345.2M, which, against the prior year’s figure, has become less negative. Since these values may be relatively short-term thinking, I’ve calculated an annualized five-year figure for 618’s net income, which stands at -HK$90.8M. This suggests that, Peking University Resources (Holdings) has historically performed better than recently, while it seems like earnings are now heading back in the right direction again.
We can further assess Peking University Resources (Holdings)’s loss by researching what’s going on in the industry as well as within the company. First, I want to quickly look into the line items. Revenue growth over the past couple of years has grown by 23.65%, implying that Peking University Resources (Holdings) is in a high-growth phase with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Looking at growth from a sector-level, the HK electronic industry has been growing its average earnings by double-digit 19.23% over the previous twelve months, and a more subdued 7.49% over the past five years. This means that whatever uplift the industry is benefiting from, Peking University Resources (Holdings) has not been able to leverage it as much as its industry peers.
What does this mean?
Though Peking University Resources (Holdings)’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues Peking University Resources (Holdings) may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Peking University Resources (Holdings) to get a more holistic view of the stock by looking at: