Wah Sun Handbags International Holdings Limited (HKG:2683) just reported healthy earnings but the stock price didn't move much. Our analysis suggests that investors might be missing some promising details.
View our latest analysis for Wah Sun Handbags International Holdings
SEHK:2683 Earnings and Revenue History November 28th 2022
Zooming In On Wah Sun Handbags International Holdings' Earnings
One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. The accrual ratio subtracts the FCF from the profit for a given period, and divides the result by the average operating assets of the company over that time. The ratio shows us how much a company's profit exceeds its FCF.
That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
Over the twelve months to September 2022, Wah Sun Handbags International Holdings recorded an accrual ratio of -0.25. That implies it has very good cash conversion, and that its earnings in the last year actually significantly understate its free cash flow. To wit, it produced free cash flow of HK$63m during the period, dwarfing its reported profit of HK$29.1m. Wah Sun Handbags International Holdings' free cash flow improved over the last year, which is generally good to see.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Wah Sun Handbags International Holdings.
Our Take On Wah Sun Handbags International Holdings' Profit Performance
As we discussed above, Wah Sun Handbags International Holdings' accrual ratio indicates strong conversion of profit to free cash flow, which is a positive for the company. Because of this, we think Wah Sun Handbags International Holdings' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And on top of that, its earnings per share increased by 28% in the last year. 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Our analysis shows 3 warning signs for Wah Sun Handbags International Holdings (1 can't be ignored!) and we strongly recommend you look at these before investing.
Today we've zoomed in on a single data point to better understand the nature of Wah Sun Handbags International Holdings' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.
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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.
華新手袋國際控股有限公司(HKG:2683)剛剛公佈了健康的收益,但股價沒有太大變動。我們的分析表明,投資者可能遺漏了一些有希望的細節。
查看我們對華新手袋國際控股公司的最新分析
聯交所:2683盈利及收入歷史2022年11月28日
放大華新手袋國際控股公司的收益
衡量一家公司將利潤轉換為自由現金流(FCF)的程度的一個關鍵財務比率是應計比率。應計制比率從給定期間的利潤中減去FCF,然後將結果除以該時間段內公司的平均運營資產。這一比率向我們展示了一家公司的利潤超過其固定現金流的程度。
這意味着負的應計比率是一件好事,因為它表明該公司帶來的自由現金流比其利潤所暗示的要多。雖然應計比率高於零並不令人擔憂,但我們確實認為,當一家公司的應計比率相對較高時,這一點值得注意。這是因為一些學術研究表明,高應計制比率往往會導致較低的利潤或較低的利潤增長。
在截至2022年9月的12個月內,華新手袋國際控股的應計比率為-0.25。這意味着它有非常好的現金轉換率,而且它去年的收益實際上大大低估了它的自由現金流。換言之,該公司在此期間產生了6300萬港元的自由現金流,令其報告的2910萬港元利潤相形見絀。華新手袋國際控股有限公司的自由現金流在過去一年有所改善,總體來説是好的。
注:我們總是建議投資者檢查資產負債表的實力。點擊此處進入我們對華新手袋國際控股的資產負債表分析。
我們對華新手袋國際控股公司盈利表現的看法
正如我們上面討論的,華新手袋國際控股的應計比率表明利潤到自由現金流的強勁轉換,這對公司來説是一個積極的因素。正因為如此,我們認為華新手袋國際控股有限公司的潛在收益潛力與法定利潤看起來一樣好,甚至可能更好!最重要的是,它的每股收益在去年增長了28%。本文的目的是評估我們可以在多大程度上依賴法定收益來反映公司的潛力,但還有很多東西需要考慮。因此,如果你想更深入地研究這隻股票,考慮它面臨的任何風險是至關重要的。我們的分析顯示華新手袋國際控股有限公司的3個警告標誌(1不容忽視!)我們強烈建議你在投資之前先看看這些。
今天,我們放大了一個單一的數據點,以更好地瞭解華新手袋國際控股公司的利潤性質。但如果你有能力將注意力集中在細枝末節上,總會有更多的東西需要發現。例如,許多人認為高股本回報率是有利的商業經濟指標,而另一些人則喜歡“跟着錢走”,尋找內部人士正在買入的股票。雖然這可能需要為您做一些研究,但您可能會發現免費擁有高股本回報率的公司的集合,或者是內部人士購買的有用的股票清單。
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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。