If EPS Growth Is Important To You, Hangzhou SF Intra-city Industrial (HKG:9699) Presents An Opportunity
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Hangzhou SF Intra-city Industrial (HKG:9699). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.
Hangzhou SF Intra-city Industrial's Improving Profits
Hangzhou SF Intra-city Industrial has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, Hangzhou SF Intra-city Industrial's EPS grew from CN¥0.089 to CN¥0.23, over the previous 12 months. Year on year growth of 154% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.
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. While we note Hangzhou SF Intra-city Industrial achieved similar EBIT margins to last year, revenue grew by a solid 41% to CN¥19b. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Check out our latest analysis for Hangzhou SF Intra-city Industrial
Fortunately, we've got access to analyst forecasts of Hangzhou SF Intra-city Industrial's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are Hangzhou SF Intra-city Industrial Insiders Aligned With All Shareholders?
It's pleasing to see company leaders with putting their money on the line, so to speak, because it increases alignment of incentives between the people running the business, and its true owners. Shareholders will be pleased by the fact that insiders own Hangzhou SF Intra-city Industrial shares worth a considerable sum. To be specific, they have CN¥98m worth of shares. That's a lot of money, and no small incentive to work hard. While their ownership only accounts for 1.0%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders.
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Our quick analysis into CEO remuneration would seem to indicate they are. Our analysis has discovered that the median total compensation for the CEOs of companies like Hangzhou SF Intra-city Industrial with market caps between CN¥7.1b and CN¥23b is about CN¥3.2m.
Hangzhou SF Intra-city Industrial's CEO took home a total compensation package worth CN¥2.4m in the year leading up to December 2024. That seems pretty reasonable, especially given it's below the median for similar sized companies. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. Generally, arguments can be made that reasonable pay levels attest to good decision-making.
Does Hangzhou SF Intra-city Industrial Deserve A Spot On Your Watchlist?
Hangzhou SF Intra-city Industrial's earnings per share have been soaring, with growth rates sky high. The sweetener is that insiders have a mountain of stock, and the CEO remuneration is quite reasonable. The sharp increase in earnings could signal good business momentum. Big growth can make big winners, so the writing on the wall tells us that Hangzhou SF Intra-city Industrial is worth considering carefully. Even so, be aware that Hangzhou SF Intra-city Industrial is showing 1 warning sign in our investment analysis , you should know about...
While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in HK with promising growth potential and insider confidence.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.