When China Biotech Services Holdings Limited (SEHK:8037) released its most recent earnings update (30 September 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were China Biotech Services Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 8037 actually performed well. Below is a quick commentary on how I see 8037 has performed. View our latest analysis for China Biotech Services Holdings
How 8037 fared against its long-term earnings performance and its industry
I 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 various companies on a more comparable basis, using new information. For China Biotech Services Holdings, its most recent trailing-twelve-month earnings is -HK$48.2M, which compared to the prior year’s level, has become less negative. Since these values may be relatively short-term thinking, I’ve calculated an annualized five-year figure for China Biotech Services Holdings’s net income, which stands at -HK$51.1M. This shows that, even though net income is negative, it has become less negative over the years.
We can further evaluate China Biotech Services Holdings’s loss by looking at what’s going on in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the last few years has increased by a mere 5.86%. Since top-line growth is also pretty stale the key to profitability in the future would be controlling cost growth rates. Inspecting growth from a sector-level, the HK healthcare industry has been growing its average earnings by double-digit 19.67% over the prior twelve months, and a more subdued 7.16% over the past couple of years. This means although China Biotech Services Holdings is presently unprofitable, it may have been aided by industry tailwinds, moving earnings in the right direction.
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 envisage what will occur going forward, and when. The most useful step is to examine company-specific issues China Biotech Services Holdings may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research China Biotech Services Holdings to get a better picture of the stock by looking at: