Examining Vision Values Holdings Limited’s (SEHK:862) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 862’s latest performance announced on 30 June 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for 862
Was 862’s recent earnings decline indicative of a tough track record?
I prefer to 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 analyze many different companies in a uniform manner using new information. For Vision Values Holdings, the most recent bottom-line -HK$46.1M, which compared to the prior year’s level, has become more negative. Since these figures are somewhat short-term, I’ve calculated an annualized five-year value for Vision Values Holdings’s net income, which stands at -HK$17.3M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
We can further evaluate Vision Values Holdings’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over last couple of years has been negative at -6.06%. The key to profitability here is to make sure the company’s cost growth is well-managed. Scanning growth from a sector-level, the HK it services industry has been growing its average earnings by double-digit 11.12% in the previous twelve months, and 14.31% over the past couple of years. This suggests that whatever uplift the industry is benefiting from, Vision Values Holdings has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Vision Values Holdings may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Vision Values Holdings to get a more holistic view of the stock by looking at:
1. Financial Health: Is 862’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.