Sheung Yue Group Holdings Limited's (HKG:1633 ) stock didn't jump after it announced some healthy earnings. We did some digging and believe investors may be worried about some underlying factors in the report.
View our latest analysis for Sheung Yue Group Holdings
SEHK:1633 Earnings and Revenue History November 29th 2022
Zooming In On Sheung Yue Group Holdings' Earnings
Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. 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.
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. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".
Sheung Yue Group Holdings has an accrual ratio of 0.29 for the year to September 2022. Unfortunately, that means its free cash flow was a lot less than its statutory profit, which makes us doubt the utility of profit as a guide. Over the last year it actually had negative free cash flow of HK$44m, in contrast to the aforementioned profit of HK$12.1m. Coming off the back of negative free cash flow last year, we imagine some shareholders might wonder if its cash burn of HK$44m, this year, indicates high risk. However, that's not all there is to consider. We can see that unusual items have impacted its statutory profit, and therefore the accrual ratio.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Sheung Yue Group Holdings.
The Impact Of Unusual Items On Profit
The fact that the company had unusual items boosting profit by HK$1.7m, in the last year, probably goes some way to explain why its accrual ratio was so weak. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).
Our Take On Sheung Yue Group Holdings' Profit Performance
Sheung Yue Group Holdings had a weak accrual ratio, but its profit did receive a boost from unusual items. For the reasons mentioned above, we think that a perfunctory glance at Sheung Yue Group Holdings' statutory profits might make it look better than it really is on an underlying level. So while earnings quality is important, it's equally important to consider the risks facing Sheung Yue Group Holdings at this point in time. To help with this, we've discovered 3 warning signs (2 shouldn't be ignored!) that you ought to be aware of before buying any shares in Sheung Yue Group Holdings.
Our examination of Sheung Yue Group Holdings has focussed on certain factors that can make its earnings look better than they are. And, on that basis, we are somewhat skeptical. 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.
尚悦集團控股有限公司(HKG:1633)在宣佈了一些健康的收益後,股票並沒有上漲。我們做了一些調查,認為投資者可能對報告中的一些潛在因素感到擔憂。
查看我們對恆躍集團控股的最新分析
聯交所:1633盈利及收入歷史2022年11月29日
放大恆越集團控股的收益
許多投資者都沒有聽説過現金流應計比率但它實際上是衡量一家公司在給定時期內自由現金流(FCF)支持公司利潤的程度的有用指標。簡單地説,這個比率是從淨利潤中減去FCF,然後用這個數字除以該公司在此期間的平均運營資產。這個比率告訴我們,一家公司的利潤中有多少不是由自由現金流支持的。
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。引用勒維倫和雷蘇泰克2014年的一篇論文,“應計利潤較高的公司未來的利潤往往較低”。
恆越集團控股截至2022年9月的年度應計比率為0.29。不幸的是,這意味着其自由現金流遠遠低於其法定利潤,這讓我們懷疑利潤作為指導的效用。在過去的一年裏,它實際上負面自由現金流為4400萬港元,而上述利潤為1210萬港元。在去年自由現金流為負的背景下,我們可以想象,一些股東可能會懷疑,該公司今年4400萬港元的現金消耗是否意味着高風險。然而,這並不是需要考慮的全部問題。我們可以看到,不尋常的項目影響了其法定利潤,從而影響了應計比率。
注:我們總是建議投資者檢查資產負債表的實力。點擊此處查看我們對恆躍集團控股的資產負債表分析。
異常項目對利潤的影響
該公司去年有一些不同尋常的項目將利潤提高了170萬港元,這一事實很可能在一定程度上解釋了其應計比率如此之低的原因。雖然有更高的利潤總是好事,但不尋常的東西帶來的巨大貢獻有時會挫傷我們的熱情。當我們分析全球絕大多數上市公司時,我們發現重大的不尋常項目往往不會重複。考慮到這些提振被描述為“不尋常的”,這正如你所預期的那樣。假設這些不同尋常的項目在本年度不會再次出現,我們因此預計明年的利潤會更弱(也就是説,在沒有業務增長的情況下)。
我們對恆躍集團控股的盈利表現的看法
恆躍集團控股的應計比率較弱,但其利潤確實得到了不尋常項目的提振。基於上述原因,我們認為,敷衍地看一眼尚悦集團控股的法定利潤,可能會使其在潛在層面上看起來比實際情況更好。因此,儘管盈利質量很重要,但考慮到恆越集團目前面臨的風險也同樣重要。為了幫助解決這個問題,我們發現3個警示標誌(2個不應該被忽視!)在購買任何恆越集團的股份之前,你應該知道這一點。
我們對恆躍集團控股有限公司的審查集中在某些因素上,這些因素可能會使其收益看起來比實際情況更好。在此基礎上,我們對此持懷疑態度。但還有很多其他方式可以讓你瞭解一家公司的看法。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。所以你可能想看看這個免費擁有高股本回報率的公司的集合,或內部人士正在購買的這份股票清單。
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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。