Examining Ipco International Limited’s (SGX:I11) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess I11’s latest performance announced on 31 October 2017 and compare these figures to its longer term trend and industry movements. Check out our latest analysis for Ipco International
Was I11’s recent earnings decline worse than the long-term trend and the industry?
I prefer to use data from the most recent 12 months, 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 method allows me to examine different companies in a uniform manner using new information. For Ipco International, its latest earnings is -SGD3.1M, which compared to last year’s level, has become more negative. Given that these values are somewhat short-term thinking, I’ve estimated an annualized five-year figure for Ipco International’s earnings, which stands at -SGD13.1M. This shows that, though net income is negative, it has become less negative over the years.
We can further analyze Ipco International’s loss by looking at what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative at -4.35%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing growth from a sector-level, the SG gas utilities industry has been growing, albeit, at a unexciting single-digit rate of 6.38% in the past year, and 5.87% over the past five. This means whatever tailwind the industry is benefiting from, Ipco International has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most insightful step is to examine company-specific issues Ipco International may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Ipco International to get a more holistic view of the stock by looking at:
1. Financial Health: Is I11’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.