It’s not a secret that every investor will make bad investments, from time to time. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a Kin Shing Holdings Limited (HKG:1630) shareholder over the last year, since the stock price plummeted 71% in that time. That’d be enough to make even the strongest stomachs churn. Because Kin Shing Holdings hasn’t been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 26% in the last three months. Of course, this share price action may well have been influenced by the 11% decline in the broader market, throughout the period.
Check out our latest analysis for Kin Shing Holdings
Given that Kin Shing 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. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Kin Shing Holdings’s revenue didn’t grow at all in the last year. In fact, it fell 1.7%. That looks pretty grim, at a glance. The market obviously agrees, since the share price tanked 71%. That’s a stern reminder that profitless companies need to grow the top line, at the very least. Of course, extreme share price falls can be an opportunity for those who are willing to really dig deeper to understand a high risk company like this.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
SEHK:1630 Income Statement April 23rd 2020
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Kin Shing Holdings’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt Kin Shing Holdings shareholders are happy with the loss of 71% over twelve months. That falls short of the market, which lost 16%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 26% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we’ve spotted with Kin Shing Holdings (including 1 which is can’t be ignored) .
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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