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Measuring Yanchang Petroleum International Limited’s (SEHK:346) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 346’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. Check out our latest analysis for Yanchang Petroleum International
How Well Did 346 Perform?
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to examine many different companies on a more comparable basis, using the most relevant data points. For Yanchang Petroleum International, its most recent bottom-line (trailing twelve month) is -HK$65.29M, which, in comparison to last year’s figure, has become less negative. Given that these values may be somewhat nearsighted, I’ve estimated an annualized five-year figure for Yanchang Petroleum International’s earnings, which stands at -HK$1.60B. This suggests that, despite the fact that net income is negative, it has become less negative over the years.
We can further evaluate Yanchang Petroleum International’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Yanchang Petroleum International’s top-line has increased by 16.04% on average, indicating that the company is in a high-growth period with expenses racing ahead revenues, leading to annual losses. Viewing growth from a sector-level, the HK oil and gas industry has been growing its average earnings by double-digit 27.85% in the previous year, and a more muted 8.92% over the previous five years. This suggests that, despite the fact that Yanchang Petroleum International is presently loss-making, it may have benefited from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Yanchang Petroleum International’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most valuable step is to examine company-specific issues Yanchang Petroleum International may be facing and whether management guidance has dependably been met in the past. I suggest you continue to research Yanchang Petroleum International to get a more holistic view of the stock by looking at: