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After reading ASM Pacific Technology Limited’s (HKG:522) most recent earnings announcement (30 September 2018), 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 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.
View our latest analysis for ASM Pacific Technology
How Well Did 522 Perform?
522’s trailing twelve-month earnings (from 30 September 2018) of HK$2.5b has declined by -10% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 27%, indicating the rate at which 522 is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, ASM Pacific Technology has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the HK Semiconductor industry of 4.9%, indicating ASM Pacific Technology has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for ASM Pacific Technology’s debt level, has increased over the past 3 years from 15% to 27%.
What does this mean?
Though ASM Pacific Technology’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I recommend you continue to research ASM Pacific Technology to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 522’s future growth? Take a look at our free research report of analyst consensus for 522’s outlook.
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Financial Health: Are 522’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.
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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.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.