Central Holding Group's (HKG:1735) stock is up by a considerable 14% over the past three months. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Central Holding Group's ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.
See our latest analysis for Central Holding Group
How Do You Calculate Return On Equity?
ROE can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Central Holding Group is:
36% = HK$84m ÷ HK$231m (Based on the trailing twelve months to June 2022).
The 'return' is the amount earned after tax over the last twelve months. So, this means that for every HK$1 of its shareholder's investments, the company generates a profit of HK$0.36.
What Has ROE Got To Do With Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.
Central Holding Group's Earnings Growth And 36% ROE
Firstly, we acknowledge that Central Holding Group has a significantly high ROE. Secondly, even when compared to the industry average of 6.8% the company's ROE is quite impressive. So, the substantial 34% net income growth seen by Central Holding Group over the past five years isn't overly surprising.
Given that the industry shrunk its earnings at a rate of 1.6% in the same period, the net income growth of the company is quite impressive.
SEHK:1735 Past Earnings Growth September 19th 2022
Earnings growth is a huge factor in stock valuation. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). Doing so will help them establish if the stock's future looks promising or ominous. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Central Holding Group is trading on a high P/E or a low P/E, relative to its industry.
Is Central Holding Group Using Its Retained Earnings Effectively?
Central Holding Group doesn't pay any dividend to its shareholders, meaning that the company has been reinvesting all of its profits into the business. This is likely what's driving the high earnings growth number discussed above.
Conclusion
In total, we are pretty happy with Central Holding Group's performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. If the company continues to grow its earnings the way it has, that could have a positive impact on its share price given how earnings per share influence long-term share prices. Let's not forget, business risk is also one of the factors that affects the price of the stock. So this is also an important area that investors need to pay attention to before making a decision on any business. You can see the 1 risk we have identified for Central Holding Group by visiting our risks dashboard for free on our platform here.
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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.
中央控股集團(HKG:1735)的股票在過去三個月中大幅上漲了14%。考慮到市場從長期來看會獎勵強勁的金融類股,我們想知道,在這種情況下,情況是否如此。具體地説,我們決定在本文中研究中央控股集團的淨資產收益率。
股本回報率(ROE)是用來評估公司管理層利用公司資本效率的關鍵指標。簡而言之,它衡量的是一家公司相對於股東權益的盈利能力。
查看我們對中央控股集團的最新分析
你如何計算股本回報率?
可使用以下公式計算淨資產收益率:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上述公式,中央控股集團的淨資產收益率為:
36%=8400萬港元×2.31億港元(根據截至2022年6月的過去12個月計算)。
“報税表”是過去12個月的税後收入。因此,這意味着股東每投資1港元,公司就會產生0.36港元的利潤。
淨資產收益率與盈利增長有什麼關係?
到目前為止,我們已經瞭解到淨資產收益率衡量的是一家公司創造利潤的效率。我們現在需要評估公司將多少利潤再投資或“保留”用於未來的增長,這就讓我們對公司的增長潛力有了一個瞭解。假設其他條件不變,淨資產收益率和利潤保留率越高,與不一定具有這些特徵的公司相比,公司的增長率就越高。
中央控股集團盈利增長和36%的淨資產收益率
首先,我們承認中央控股集團擁有顯著較高的淨資產收益率。其次,即使與6.8%的行業平均水平相比,該公司的淨資產收益率也相當令人印象深刻。因此,中央控股集團過去五年34%的淨利潤大幅增長並不太令人意外。
考慮到該行業同期盈利縮水1.6%的速度,該公司的淨收入增長相當可觀。
聯交所:1735過去盈利增長2022年9月19日
盈利增長是股票估值的一個重要因素。對於投資者來説,重要的是知道市場是否已經消化了公司預期的收益增長(或下降)。這樣做將有助於他們確定該股的未來看起來是光明的還是不祥的。衡量預期收益增長的一個很好的指標是市盈率,它根據一隻股票的盈利前景決定市場願意為其支付的價格。因此,你可能想要檢查一下中央控股集團相對於其行業的市盈率是高還是低。
中央控股集團是否有效地利用了其留存收益?
中央控股集團不向股東支付任何股息,這意味着該公司一直在將所有利潤再投資於該業務。這很可能是推動上述高收益增長數字的原因。
結論
總體而言,我們對中央控股集團的表現相當滿意。特別是,很高興看到該公司在業務上投入了大量資金,並獲得了高回報率,這導致了其收益的可觀增長。如果該公司繼續以目前的方式增長收益,考慮到每股收益對長期股價的影響,這可能會對其股價產生積極影響。我們不要忘記,商業風險也是影響股票價格的因素之一。因此,這也是投資者在對任何業務做出決定之前需要關注的一個重要領域。您可以通過訪問我們的風險控制面板在我們的平臺上是免費的。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。