The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors.  But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'  Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Bosideng International Holdings (HKG:3998). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Bosideng International Holdings with the means to add long-term value to shareholders.

How Fast Is Bosideng International Holdings Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price.  That means EPS growth is considered a real positive by most successful long-term investors.   Impressively, Bosideng International Holdings has grown EPS by 19% per year, compound, in the last three years.   If growth like this continues on into the future, then shareholders will have plenty to smile about.  

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth.    While we note Bosideng International Holdings achieved similar EBIT margins to last year, revenue grew by a solid 6.4% to CN¥18b.  That's progress.  

In the chart below, you can see how the company has grown earnings and revenue, over time.  Click on the chart to see the exact numbers.

SEHK:3998 Earnings and Revenue History March 4th 2024

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Bosideng International Holdings' forecast profits?

Are Bosideng International Holdings Insiders Aligned With All Shareholders?

Owing to the size of Bosideng International Holdings, we wouldn't expect insiders to hold a significant proportion of the company.  But we are reassured by the fact they have invested in the company.     Notably, they have an enviable stake in the company, worth CN¥1.2b.   Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.  

It means a lot to see insiders invested in the business, but shareholders may be wondering if remuneration policies are in their best interest.  Our quick analysis into CEO remuneration would seem to indicate they are.    For companies with market capitalisations between CN¥29b and CN¥86b, like Bosideng International Holdings, the median CEO pay is around CN¥7.2m.  

Bosideng International Holdings offered total compensation worth CN¥5.2m to its CEO in the year to March 2023.  That is actually below the median for CEO's of similarly sized companies.   CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests.  Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Is Bosideng International Holdings Worth Keeping An Eye On?

If you believe that share price follows earnings per share you should definitely be delving further into Bosideng International Holdings' strong EPS growth.   If that's not enough, consider also that the CEO pay is quite reasonable, and insiders are well-invested alongside other shareholders.  Everyone has their own preferences when it comes to investing but it definitely makes Bosideng International Holdings look rather interesting indeed.     We don't want to rain on the parade too much, but we did also find 1 warning sign for Bosideng International Holdings that you need to be mindful of.  

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in HK with promising growth potential and insider confidence.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.