December 7, 2021

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Introducing Forise International (SGX:I5H), The Stock That Collapsed 96%

We’re definitely into long term investing, but some companies are simply bad investments over any time frame. We really hate to see fellow investors lose their hard-earned money. For example, we sympathize with anyone who was caught holding Forise International Limited (SGX:I5H) during the five years that saw its share price drop a whopping 96%. We also note that the stock has performed poorly over the last year, with the share price down 67%. Shareholders have had an even rougher run lately, with the share price down 80% 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.

View our latest analysis for Forise International

Given that Forise International 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last half decade, Forise International saw its revenue increase by 51% per year. That’s better than most loss-making companies. So on the face of it we’re really surprised to see the share price has averaged a fall of 49% each year, in the same time period. It could be that the stock was over-hyped before. While there might be an opportunity here, you’d want to take a close look at the balance sheet strength.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

SGX:I5H Income Statement April 22nd 2020

It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What about the Total Shareholder Return (TSR)?

We’ve already covered Forise International’s share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Forise International shareholders, and that cash payout explains why its total shareholder loss of 83%, over the last 5 years, isn’t as bad as the share price return.

A Different Perspective

While the broader market lost about 21% in the twelve months, Forise International shareholders did even worse, losing 67%. 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, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 30% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Forise International better, we need to consider many other factors. Case in point: We’ve spotted 6 warning signs for Forise International you should be aware of, and 4 of them are a bit concerning.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SG exchanges.

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.

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