Shareholders appeared unconcerned with Winson Holdings Hong Kong Limited's (HKG:6812) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.
Check out our latest analysis for Winson Holdings Hong Kong
SEHK:6812 Earnings and Revenue History July 7th 2022
Examining Cashflow Against Winson Holdings Hong Kong's Earnings
As finance nerds would already know, the accrual ratio from cashflow is a key measure for assessing how well a company's free cash flow (FCF) matches its profit. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. This ratio tells us how much of a company's profit is not backed by free cashflow.
As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative. While it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".
For the year to March 2022, Winson Holdings Hong Kong had an accrual ratio of -0.13. That implies it has good cash conversion, and implies that its free cash flow solidly exceeded its profit last year. To wit, it produced free cash flow of HK$33m during the period, dwarfing its reported profit of HK$22.1m. Winson Holdings Hong Kong's free cash flow actually declined over the last year, which is disappointing, like non-biodegradable balloons.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Winson Holdings Hong Kong.
Our Take On Winson Holdings Hong Kong's Profit Performance
As we discussed above, Winson Holdings Hong Kong has perfectly satisfactory free cash flow relative to profit. Based on this observation, we consider it likely that Winson Holdings Hong Kong's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at 6.0% per year over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Winson Holdings Hong Kong, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 3 warning signs with Winson Holdings Hong Kong, and understanding these should be part of your investment process.
This note has only looked at a single factor that sheds light on the nature of Winson Holdings Hong Kong's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.
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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.
股东们似乎并不担心永盛控股香港有限公司的(HKG:6812)上周财报乏善可陈。我们的分析表明,尽管利润疲软,但业务的基础是强大的。
查看我们对Winson Holdings Hong Kong的最新分析
联交所:6812盈利及收入历史2022年7月7日
对照永盛控股香港的盈利审查现金流
正如金融书呆子们已经知道的那样,现金流应计比率是评估一家公司的自由现金流(FCF)与利润匹配程度的关键指标。简单地说,这个比率是从净利润中减去FCF,然后用这个数字除以该公司在此期间的平均运营资产。这个比率告诉我们,一家公司的利润中有多少不是由自由现金流支持的。
因此,负的应计比率对公司是积极的,而正的应计比率是负的。虽然应计比率为正并不是问题,这表明非现金利润达到了一定的水平,但高的应计比率可以说是一件坏事,因为它表明账面利润与现金流不匹配。引用勒维伦和雷苏泰克2014年的一篇论文,“应计利润较高的公司未来的利润往往较低”。
在截至2022年3月的一年中,温森控股香港的应计比率为-0.13。这意味着它有很好的现金转换率,并意味着它的自由现金流稳步超过了去年的利润。换言之,该公司在此期间产生了3300万港元的自由现金流,令其公布的2210万港元利润相形见绌。温森控股香港的自由现金流实际上在去年有所下降,这令人失望,就像不可生物降解的气球一样。
注:我们总是建议投资者检查资产负债表的实力。点击此处查看我们对永盛控股香港的资产负债表分析。
我们对永盛控股香港盈利表现的看法
如上所述,永盛控股香港拥有令人满意的自由现金流相对于利润。基于这一观察,我们认为温森控股香港的法定利润很可能实际上低估了其盈利潜力!最重要的是,它的每股收益在过去三年里以每年6.0%的速度增长。本文的目的是评估我们可以在多大程度上依赖法定收益来反映公司的潜力,但还有很多东西需要考虑。如果你真的想更深入地研究永盛控股香港,你还应该调查一下它目前面临的风险。在投资风险方面,我们已经确定了三个警告信号与永盛控股香港合作,并了解这些应该是你投资过程的一部分。
这份报告只关注了一个因素,它揭示了永盛控股香港的利润性质。但还有很多其他方式可以让你了解一家公司的看法。例如,许多人认为高股本回报率是有利的商业经济指标,而另一些人则喜欢“跟着钱走”,寻找内部人士正在买入的股票。所以你可能想看看这个免费拥有高股本回报率的公司的集合,或内部人士正在购买的这份股票清单。
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本文由Simply Wall St.撰写,具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论,我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议,也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意,我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。