When Wealth Glory Holdings Limited (
HKG:8269
) released its most recent earnings update (30 September 2018),can't install kb5034441 I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Wealth Glory Holdings performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 8269 has performed.
View our latest analysis for Wealth Glory Holdings
Did 8269’s recent performance beat its trend and industry?
8269 is loss-making, with the most recent trailing twelve-month earnings of -HK$54.4m (from 30 September 2018), which compared to last year has become less negative. However, the company’s loss seem to be contracting over the medium term, with the five-year earnings average of -HK$80.7m. Each year, for the past five years 8269 has seen an annual decline in revenue of -35%, on average. This adverse movement is a driver of the company’s inability to reach breakeven.
Inspecting growth from a sector-level, the HK trade distributors industry has been growing its average earnings by double-digit 35% in the past twelve months,
SEHK:8269 Income Statement Export January 3rd 19
Given that Wealth Glory Holdings is not profitable, even if operating expenses (SG&A and one-year R&D) continues to fall at previous year’s rate of -16%, the company’s current cash level (HK$14m) will still be insufficient to cover its expenses in the upcoming year. This is not a great sign in terms of operations and cash management. Although this is a relatively simplistic calculation, and Wealth Glory Holdings may continue to reduce its costs further or raise debt capital instead of coming to equity markets, the analysis still helps us understand how sustainable the Wealth Glory Holdings’s operation is, and when things may have to change.
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 forecast what will happen in the future and when. The most insightful step is to examine company-specific issues Wealth Glory Holdings may be facing and whether management guidance has steadily been met in the past. I suggest you continue to research Wealth Glory Holdings to get a more holistic view of the stock by looking at:
Financial Health
: Are 8269’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
.
Story continues
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at
.
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