Long term investing works well, but it doesn’t always work for each individual stock. We really hate to see fellow investors lose their hard-earned money. Anyone who held China Energine International (Holdings) Limited (HKG:1185) for five years would be nursing their metaphorical wounds since the share price dropped 89% in that time. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.
While a drop like that is definitely a body blow, money isn’t as important as health and happiness.
Given that China Energine International (Holdings) didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over half a decade China Energine International (Holdings) reduced its trailing twelve month revenue by 53% for each year. That’s definitely a weaker result than most pre-profit companies report. So it’s not that strange that the share price dropped 35% per year in that period. This kind of price performance makes us very wary, especially when combined with falling revenue. Ironically, that behavior could create an opportunity for the contrarian investor – but only if there are good reasons to predict a brighter future.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on China Energine International (Holdings)’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We regret to report that China Energine International (Holdings) shareholders are down 19% for the year. Unfortunately, that’s worse than the broader market decline of 3.8%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. However, the loss over the last year isn’t as bad as the 35% per annum loss investors have suffered over the last half decade. We’d need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It’s always interesting to track share price performance over the longer term. But to understand China Energine International (Holdings) better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 5 warning signs with China Energine International (Holdings) (at least 2 which are a bit unpleasant) , and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.