Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at SIIC Environment Holdings Ltd’s (SGX:BHK) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for SIIC Environment Holdings
Did BHK beat its long-term earnings growth trend and its industry?
For the purpose of this commentary, I like to use 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 technique allows me to assess various companies in a uniform manner using the most relevant data points. “For SIIC Environment Holdings, its “, most recent earnings is CN¥520.5M, which, against the previous year’s figure, has jumped up by 28.74%. Since these figures may be somewhat short-term thinking, I have created an annualized five-year figure for BHK’s earnings, which stands at CN¥241.9M. This means that, on average, SIIC Environment Holdings has been able to consistently grow its earnings over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is solely owing to an industry uplift, or if SIIC Environment Holdings has experienced some company-specific growth. The rise in earnings seems to be supported by a solid top-line increase beating its growth rate of expenses. Though this resulted in a margin contraction, it has made SIIC Environment Holdings more profitable. Eyeballing growth from a sector-level, the SG water utilities industry has been growing, albeit, at a subdued single-digit rate of 8.69% over the previous twelve months, and 6.75% over the previous five years. This shows that any uplift the industry is gaining from, SIIC Environment Holdings is able to leverage this to its advantage.
What does this mean?
Though SIIC Environment Holdings’s past data is helpful, it is only one aspect of my investment thesis. While SIIC Environment Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research SIIC Environment Holdings to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BHK’s future growth? Take a look at our free research report of analyst consensus for BHK’s outlook.