Should Weakness in Sichuan Huafeng Technology Co., LTD.'s (SHSE:688629) Stock Be Seen As A Sign That Market Will Correct The Share Price Given Decent Financials?
Should Weakness in Sichuan Huafeng Technology Co., LTD.'s (SHSE:688629) Stock Be Seen As A Sign That Market Will Correct The Share Price Given Decent Financials?
Sichuan Huafeng Technology (SHSE:688629) has had a rough three months with its share price down 38%. However, stock prices are usually driven by a company's financials over the long term, which in this case look pretty respectable. In this article, we decided to focus on Sichuan Huafeng Technology's ROE.
四川华丰科技（上海证券交易所代码：688629）经历了艰难的三个月，其股价下跌了38％。但是，从长远来看，股票价格通常由公司的财务状况驱动，在这种情况下，这看起来相当可观。在本文中，我们决定重点关注四川华丰科技的投资回报率。
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
股本回报率或投资回报率是用于评估公司管理层利用公司资本效率的关键指标。简而言之，它用于评估公司相对于其股权资本的盈利能力。
How Is ROE Calculated?
ROE 是如何计算的？
ROE can be calculated by using the formula:
ROE 可以通过以下公式计算：
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
股本回报率 = 净利润（来自持续经营业务）÷ 股东权益
So, based on the above formula, the ROE for Sichuan Huafeng Technology is:
因此，根据上述公式，四川华丰科技的投资回报率为：
3.9% = CN¥58m ÷ CN¥1.5b (Based on the trailing twelve months to September 2023).
3.9% = 5800万元人民币 ÷ 15亿元人民币（基于截至2023年9月的过去十二个月）。
The 'return' is the income the business earned over the last year. That means that for every CN¥1 worth of shareholders' equity, the company generated CN¥0.04 in profit.
“回报” 是企业在过去一年中获得的收入。这意味着，每获得价值1元人民币的股东权益，该公司就会产生0.04元人民币的利润。
What Is The Relationship Between ROE And Earnings Growth?
投资回报率与收益增长之间有什么关系？
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.
我们已经确定，投资回报率是衡量公司未来收益的有效盈利指标。根据公司选择将多少利润进行再投资或 “保留”，我们便能够评估公司未来创造利润的能力。假设其他条件都一样，与功能不相同的公司相比，具有更高股本回报率和更高利润保留率的公司通常具有更高的增长率。
Sichuan Huafeng Technology's Earnings Growth And 3.9% ROE
四川华丰科技的收益增长和3.9％的投资回报率
As you can see, Sichuan Huafeng Technology's ROE looks pretty weak. Even when compared to the industry average of 7.2%, the ROE figure is pretty disappointing. Despite this, surprisingly, Sichuan Huafeng Technology saw an exceptional 61% net income growth over the past five years. We reckon that there could be other factors at play here. Such as - high earnings retention or an efficient management in place.
如你所见，四川华丰科技的投资回报率看起来相当疲软。即使与7.2％的行业平均水平相比，投资回报率的数字也相当令人失望。尽管如此，令人惊讶的是，四川华丰科技在过去五年中实现了61％的惊人净收入增长。我们认为这里可能还有其他因素在起作用。例如——高收益留存率或实行高效管理。
Next, on comparing with the industry net income growth, we found that Sichuan Huafeng Technology's growth is quite high when compared to the industry average growth of 14% in the same period, which is great to see.
接下来，与行业净收入增长相比，我们发现，与同期行业平均增长14％相比，四川华丰科技的增长相当高，这令人欣喜。
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). This then helps them determine if the stock is placed for a bright or bleak future. 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 Sichuan Huafeng Technology is trading on a high P/E or a low P/E, relative to its industry.
收益增长是股票估值的重要因素。对于投资者来说，重要的是要知道市场是否对公司的预期收益增长（或下降）进行了定价。然后，这可以帮助他们确定股票是为光明还是暗淡的未来而布局。衡量预期收益增长的一个很好的指标是市盈率，它根据收益前景决定了市场愿意为股票支付的价格。因此，您可能需要检查四川华丰科技相对于其行业是高市盈率还是低市盈率。
Is Sichuan Huafeng Technology Making Efficient Use Of Its Profits?
四川华丰科技是否在有效利用其利润？
Sichuan Huafeng Technology doesn't pay any dividend currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above.
四川华丰科技目前不派发任何股息，这实质上意味着它一直在将所有利润再投资于该业务。这无疑促成了我们上面讨论的高收益增长数字。
Conclusion
结论
On the whole, we do feel that Sichuan Huafeng Technology has some positive attributes. With a high rate of reinvestment, albeit at a low ROE, the company has managed to see a considerable growth in its earnings. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.
总的来说，我们确实认为四川华丰科技具有一些积极的属性。尽管投资回报率很低，但由于再投资率很高，该公司的收益实现了可观的增长。既然如此，对分析师最新预测的研究表明，预计该公司未来的收益增长将放缓。要详细了解分析师对公司的最新预测，请查看该公司的分析师预测的可视化。
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
对这篇文章有反馈吗？对内容感到担忧？直接联系我们。 或者，给编辑团队 (at) simplywallst.com 发送电子邮件。
Simply Wall St的这篇文章本质上是笼统的。我们仅使用公正的方法根据历史数据和分析师的预测提供评论，我们的文章无意作为财务建议。它不构成买入或卖出任何股票的建议，也没有考虑到您的目标或财务状况。我们的目标是为您提供由基本数据驱动的长期重点分析。请注意，我们的分析可能不考虑最新的价格敏感型公司公告或定性材料。简而言之，华尔街没有持有任何上述股票的头寸。