For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Sinosoft Technology Group Limited (SEHK:1297) useful as an attempt to give more color around how Sinosoft Technology Group is currently performing. View our latest analysis for Sinosoft Technology Group
Commentary On 1297’s Past Performance
I prefer 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 allows me to analyze various companies on a more comparable basis, using the most relevant data points. “For Sinosoft Technology Group, its “, most recent twelve-month earnings is CN¥199.8M, which, relative to the prior year’s figure, has moved up by 17.82%. Given that these figures are somewhat myopic, I have determined an annualized five-year figure for 1297’s earnings, which stands at CN¥135.1M. This means that, on average, Sinosoft Technology Group has been able to gradually grow its net income over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is merely owing to an industry uplift, or if Sinosoft Technology Group has seen some company-specific growth. Over the past couple of years, Sinosoft Technology Group increased its bottom line faster than revenue by effectively controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the HK software industry has been growing, albeit, at a unexciting single-digit rate of 8.89% over the prior twelve months, and 6.98% over the previous few years. This shows that any uplift the industry is enjoying, Sinosoft Technology Group is capable of leveraging this to its advantage.
What does this mean?
Sinosoft Technology Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Sinosoft Technology Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Sinosoft Technology Group to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for 1297’s future growth? Take a look at our free research report of analyst consensus for 1297’s outlook.