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Today I will take a look at Towngas China Company Limited's (HKG:1083) most recent earnings update (31 December 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the gas utilities industry performed. As an investor, I find it beneficial to assess 1083’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
See our latest analysis for Towngas China
How Well Did 1083 Perform?
1083's trailing twelve-month earnings (from 31 December 2018) of HK$1.2b 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 5.1%, indicating the rate at which 1083 is growing has slowed down. Why is this? Well, let's look at what's occurring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Towngas China has fallen short of achieving a 20% return on equity (ROE), recording 8.0% instead. Furthermore, its return on assets (ROA) of 4.3% is below the HK Gas Utilities industry of 5.1%, indicating Towngas China's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Towngas China’s debt level, has increased over the past 3 years from 4.9% to 6.4%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. You should continue to research Towngas China to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 1083’s future growth? Take a look at our free research report of analyst consensus for 1083’s outlook.
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Financial Health: Are 1083’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 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.