After reading Lajin Entertainment Network Group Limited’s (SEHK:8172) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Lajin Entertainment Network Group’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Lajin Entertainment Network Group
Was 8172’s recent earnings decline indicative of a tough track record?
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 blend enables me to assess various companies on a more comparable basis, using the most relevant data points. For Lajin Entertainment Network Group, its most recent earnings (trailing twelve month) is -HK$172.6M, which, against the previous year’s figure, has become more negative. Since these figures may be fairly short-term, I’ve created an annualized five-year value for 8172’s earnings, which stands at -HK$54.2M. This doesn’t look much better, as earnings seem to have consistently been getting more and more negative over time.
We can further assess Lajin Entertainment Network Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Lajin Entertainment Network Group has seen an annual decline in revenue of -2.14%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the HK media industry has been relatively flat in terms of earnings growth . Thought this is a bit of a turnaround from a volatile drop of -15.73% in the past few years. This means any near-term the industry is facing, it’s hitting Lajin Entertainment Network Group harder than its peers.
What does this mean?
Though Lajin Entertainment Network Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues Lajin Entertainment Network Group may be facing and whether management guidance has steadily been met in the past. I recommend you continue to research Lajin Entertainment Network Group to get a better picture of the stock by looking at: