With EPS Growth And More, Astrum Financial Holdings (HKG:8333) Makes An Interesting Case
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like Astrum Financial Holdings (HKG:8333), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Astrum Financial Holdings' Improving Profits
Astrum Financial Holdings 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. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Astrum Financial Holdings' EPS shot from HK$0.023 to HK$0.039, over the last year. It's not often a company can achieve year-on-year growth of 68%. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Not all of Astrum Financial Holdings' revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. EBIT margins for Astrum Financial Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 37% to HK$38m. That's progress.
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
See our latest analysis for Astrum Financial Holdings
Since Astrum Financial Holdings is no giant, with a market capitalisation of HK$54m, you should definitely check its cash and debt before getting too excited about its prospects.
Are Astrum Financial Holdings Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
We haven't seen any insiders selling Astrum Financial Holdings shares, in the last year. So it's definitely nice that Chairman & CEO Chik Pan bought HK$66k worth of shares at an average price of around HK$0.46. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Astrum Financial Holdings.
These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for Astrum Financial Holdings will reveal that insiders own a significant piece of the pie. Indeed, with a collective holding of 56%, company insiders are in control and have plenty of capital behind the venture. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. Valued at only HK$54m Astrum Financial Holdings is really small for a listed company. So this large proportion of shares owned by insiders only amounts to HK$30m. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.
Does Astrum Financial Holdings Deserve A Spot On Your Watchlist?
Astrum Financial Holdings' earnings have taken off in quite an impressive fashion. The cherry on top is that insiders own a bunch of shares, and one has been buying more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest Astrum Financial Holdings belongs near the top of your watchlist. What about risks? Every company has them, and we've spotted 3 warning signs for Astrum Financial Holdings (of which 1 doesn't sit too well with us!) you should know about.
Keen growth investors love to see insider activity. Thankfully, Astrum Financial Holdings isn't the only one. You can see a a curated list of Hong Kong companies which have exhibited consistent growth accompanied by high insider ownership.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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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.