January 26, 2022

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Some Ying Kee Tea House Group (HKG:8241) Shareholders Are Down 46%

It’s easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Ying Kee Tea House Group Limited (HKG:8241) shareholders over the last year, as the share price declined 46%. That contrasts poorly with the market return of -16%. Ying Kee Tea House Group may have better days ahead, of course; we’ve only looked at a one year period. The falls have accelerated recently, with the share price down 24% in the last three months. But this could be related to the weak market, which is down 13% in the same period.

Check out our latest analysis for Ying Kee Tea House Group

Given that Ying Kee Tea House Group 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Ying Kee Tea House Group’s revenue didn’t grow at all in the last year. In fact, it fell 12%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 46% in that time. What would you expect when revenue is falling, and it doesn’t make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

SEHK:8241 Income Statement April 16th 2020

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Ying Kee Tea House Group’s earnings, revenue and cash flow.

A Different Perspective

Ying Kee Tea House Group shareholders are down 46% for the year, even worse than the market loss of 16%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 24%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. It’s always interesting to track share price performance over the longer term. But to understand Ying Kee Tea House Group better, we need to consider many other factors. Take risks, for example – Ying Kee Tea House Group has 4 warning signs (and 2 which are concerning) we think you should know about.

If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can 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.

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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