Today I will examine Kinergy Corporation Ltd.’s (HKG:3302) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of 3302’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Did 3302 beat its long-term earnings growth trend and its industry?
3302’s trailing twelve-month earnings (from 31 December 2018) of S$8.7m has
increased by 8.7% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 14%, indicating the rate at which 3302 is growing has slowed down.
Why could this be happening? Well,
let’s take a look at what’s
with margins and
is experiencing the hit as well.
In terms of returns from investment, Kinergy has
fallen short of achieving a 20% return on equity (ROE), recording 9.3% instead.
However, its return on assets (ROA) of 7.3% exceeds the HK Electronic industry of 4.9%, indicating Kinergy has used its assets more efficiently.
Though, its return on capital (ROC), which also accounts for Kinergy’s debt level, has declined over the past 3 years from 20% to 6.9%.
What does this mean?
Though Kinergy’s past data is helpful, it is only one aspect of my investment thesis.
While Kinergy has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future.
I suggest you
continue to research Kinergy to get a
more holistic view
of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 3302’s future growth? Take a look at our free research report of analyst consensus for 3302’s outlook.
- Financial Health: Are 3302’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.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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