Yahoo Finance How Has Emperor International Holdings Limited’s (HKG:163) Earnings Fared Against The Long Term Trend
Analyzing Emperor International Holdings Limited’s (HKG:163) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess 163’s recent performance announced on 31 March 2018 and compare these figures to its long-term trend and industry movements.
Check out our latest analysis for Emperor International Holdings
Was 163’s weak performance lately a part of a long-term decline?
163’s trailing twelve-month earnings (from 31 March 2018) of HK$3.37b has declined by -3.21% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -17.32%, indicating the rate at which 163 is growing has slowed down. What could be happening here? Well, let’s look at what’s going on with margins and if the rest of the industry is facing the same headwind.
Revenue growth in the past couple of years, has been positive, yet earnings growth has been declining. This means Emperor International Holdings has been growing expenses, which is hurting margins and earnings, and is not a sustainable practice. Looking at growth from a sector-level, the HK real estate industry has been growing its average earnings by double-digit 43.27% over the past year, and a more muted 5.19% over the last five years. This growth is a median of profitable companies of 25 Real Estate companies in HK including S E A Holdings, Sino Harbour Holdings Group and Y. T. Realty Group. This shows that any uplift the industry is benefiting from, Emperor International Holdings has not been able to gain as much as its average peer.
In terms of returns from investment, Emperor International Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11.06% instead. However, its return on assets (ROA) of 6.21% exceeds the HK Real Estate industry of 3.79%, indicating Emperor International Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Emperor International Holdings’s debt level, has declined over the past 3 years from 2.07% to 1.72%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 40.13% to 81.90% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Emperor International Holdings to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 163’s future growth? Take a look at our free research report of analyst consensus for 163’s outlook.
Financial Health: Are 163’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 March 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 editorial-team@simplywallst.com.
