December 1, 2021

Earn Money

Business Life

Here’s Why I Think Asiainfo Technologies (HKG:1675) Is An Interesting Stock

It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money. But as Peter Lynch said in One Up On Wall Street, ‘Long shots almost never pay off.’

So if you’re like me, you might be more interested in profitable, growing companies, like Asiainfo Technologies (HKG:1675). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

View our latest analysis for Asiainfo Technologies

How Fast Is Asiainfo Technologies Growing Its Earnings Per Share?

In the last three years Asiainfo Technologies’s earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn’t tell us much. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, Asiainfo Technologies’s EPS shot from CN¥0.33 to CN¥0.56, over the last year. Year on year growth of 73% is certainly a sight to behold.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Asiainfo Technologies maintained stable EBIT margins over the last year, all while growing revenue 9.8% to CN¥5.7b. That’s a real positive.

The chart below shows how the company’s bottom and top lines have progressed over time. For finer detail, click on the image.

SEHK:1675 Income Statement April 14th 2020

While we live in the present moment at all times, there’s no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for Asiainfo Technologies?

Are Asiainfo Technologies Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. That’s because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don’t know the exact thinking behind their acquisitions.

One gleaming positive for Asiainfo Technologies, in the last year, is that a certain insider has buying shares with ample enthusiasm. In one fell swoop, Chairman Suning Tian, spent HK$137m, at a price of HK$9.20 per share. It doesn’t get much better than that, in terms of large investments from insiders.

Along with the insider buying, another encouraging sign for Asiainfo Technologies is that insiders, as a group, have a considerable shareholding. Indeed, they have a glittering mountain of wealth invested in it, currently valued at CN¥1.8b. Coming in at 23% of the business, that holding gives insiders a lot of influence, and plenty of reason to generate value for shareholders. So it might be my imagination, but I do sense the glimmer of an opportunity.

Is Asiainfo Technologies Worth Keeping An Eye On?

Asiainfo Technologies’s earnings have taken off like any random crypto-currency did, back in 2017. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe Asiainfo Technologies deserves timely attention. What about risks? Every company has them, and we’ve spotted 1 warning sign for Asiainfo Technologies you should know about.

The good news is that Asiainfo Technologies is not the only growth stock with insider buying. Here’s a list of them… with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

If you spot an error that warrants correction, please contact the editor at [email protected] 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

Source Article