Did You Manage To Avoid Hua Medicine (Shanghai)'s (HKG:2552) Painful 59% Share Price Drop?
The nature of investing is that you win some, and you lose some. Anyone who held Hua Medicine (Shanghai) Ltd. (HKG:2552) over the last year knows what a loser feels like. The share price has slid 59% in that time. Because Hua Medicine (Shanghai) hasn't been listed for many years, the market is still learning about how the business performs. The falls have accelerated recently, with the share price down 39% in the last three months. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
See our latest analysis for Hua Medicine (Shanghai)
Hua Medicine (Shanghai) wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last twelve months, Hua Medicine (Shanghai) increased its revenue by 144%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 59%. This could mean hype has come out of the stock because the bottom line is concerning investors. We'd definitely consider it a positive if the company is trending towards profitability. If you can see that happening, then perhaps consider adding this stock to your watchlist.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Hua Medicine (Shanghai) in this interactive graph of future profit estimates.
A Different Perspective
We doubt Hua Medicine (Shanghai) shareholders are happy with the loss of 59% over twelve months. That falls short of the market, which lost 18%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 39%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Hua Medicine (Shanghai) (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
