Long term investing is the way to go, but that doesn’t mean you should hold every stock forever. It hits us in the gut when we see fellow investors suffer a loss. For example, we sympathize with anyone who was caught holding Hao Wen Holdings Limited (HKG:8019) during the five years that saw its share price drop a whopping 99%. And it’s not just long term holders hurting, because the stock is down 47% in the last year. Shareholders have had an even rougher run lately, with the share price down 44% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
View our latest analysis for Hao Wen Holdings
Given that Hao Wen 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over five years, Hao Wen Holdings grew its revenue at 12% per year. That’s a pretty good rate for a long time period. So the stock price fall of 62% per year seems pretty steep. The market can be a harsh master when your company is losing money and revenue growth disappoints.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
SEHK:8019 Income Statement May 28th 2020
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
We regret to report that Hao Wen Holdings shareholders are down 47% for the year. Unfortunately, that’s worse than the broader market decline of 6.9%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, longer term shareholders are suffering worse, given the loss of 60% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It’s always interesting to track share price performance over the longer term. But to understand Hao Wen Holdings better, we need to consider many other factors. For example, we’ve discovered 3 warning signs for Hao Wen Holdings (2 make us uncomfortable!) that you should be aware of before investing here.
We will like Hao Wen Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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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.