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Does China Shanshui Cement Group Limited's (HKG:691) Recent Track Record Look Strong?

After looking at China Shanshui Cement Group Limited's (SEHK:691) latest earnings update (31 December 2019), I found it helpful to revisit the company's performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings.

See our latest analysis for China Shanshui Cement Group

Were 691's earnings stronger than its past performances and the industry?

691 recently turned a profit of CN¥3.0b (most recent trailing twelve-months) compared to its average loss of -CN¥147.8m over the past five years.

SEHK:691 Income Statement April 4th 2020
SEHK:691 Income Statement April 4th 2020

In terms of returns from investment, China Shanshui Cement Group has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the HK Basic Materials industry of 9.8%, indicating China Shanshui Cement Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for China Shanshui Cement Group’s debt level, has increased over the past 3 years from 11% to 34%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 143% to 49% over the past 5 years.

What does this mean?

China Shanshui Cement Group's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as China Shanshui Cement Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research China Shanshui Cement Group to get a more holistic view of the stock by looking at:

  1. Financial Health: Are 691’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.

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.