After looking at British and Malayan Holdings Limited’s (SGX:CJN) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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. See our latest analysis for British and Malayan Holdings
Could CJN beat the long-term trend and outperform its industry?
I 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 blend enables me to analyze different stocks in a uniform manner using new information. For British and Malayan Holdings, its latest twelve-month earnings is -SGD0.1M, which, against last year’s level, has become less negative. Since these values are somewhat short-term, I’ve estimated an annualized five-year figure for CJN’s earnings, which stands at SGD0.7M.
Additionally, we can assess British and Malayan Holdings’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 few years has been relatively muted, remaining flat on average at -0.28%. Given that top-line growth is also pretty stale the key to profitability in the future would be managing costs. Eyeballing growth from a sector-level, the SG capital markets industry has been growing, albeit, at a muted single-digit rate of 3.25% over the prior year, and a flatter -1.22% over the past five. This means that even though British and Malayan Holdings is presently unprofitable, whatever near-term headwind the industry is experiencing, the impact on British and Malayan Holdings has been softer relative to its peers.
What does this mean?
Though British and Malayan Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most valuable step is to examine company-specific issues British and Malayan Holdings may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research British and Malayan Holdings to get a better picture of the stock by looking at: