Understanding YHI International Limited’s (SGX:BPF) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how YHI International is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. See our latest analysis for BPF
How BPF fared against its long-term earnings performance and its industry
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to examine various companies on a similar basis, using new information. For YHI International, the most recent earnings is SGD5.6M, which, against the prior year’s figure, has risen by a fairly muted 4.32%. Since these figures are somewhat nearsighted, I have computed an annualized five-year value for YHI International’s net income, which stands at SGD15.9M. This means that, despite the fact that earnings increased from last year’s level, over a longer period of time, YHI International’s earnings have been waning on average.
Why is this? Well, let’s look at what’s going on with margins and whether the entire industry is experiencing the hit as well. Although revenue growth in the past couple of years, has been negative, earnings growth has been falling by even more, meaning YHI International has been increasing its expenses. This harms margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the SG distributors industry has been growing its average earnings by double-digit 12.19% in the previous twelve months, . This is a turnaround from a volatile drop of -19.60% in the previous couple of years. This shows that, in the recent industry expansion, YHI International has not been able to leverage it as much as its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are impacting the entire industry hence the high industry growth rate over the same period of time. I recommend you continue to research YHI International to get a better picture of the stock by looking at:
1. Financial Health: Is BPF’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.