HM International Holdings Limited (HKG:8416) recently posted some strong earnings, and the market responded positively. We have done some analysis, and we found several positive factors beyond the profit numbers.
Check out our latest analysis for HM International Holdings
SEHK:8416 Earnings and Revenue History August 11th 2022
Examining Cashflow Against HM International Holdings' Earnings
In high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accrual ratio (from cashflow). In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. The ratio shows us how much a company's profit exceeds its FCF.
Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. 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".
Over the twelve months to June 2022, HM International Holdings recorded an accrual ratio of -0.23. That indicates that its free cash flow quite significantly exceeded its statutory profit. In fact, it had free cash flow of HK$20m in the last year, which was a lot more than its statutory profit of HK$10.7m. HM International Holdings' free cash flow improved over the last year, which is generally good to see. 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 HM International Holdings.
The Impact Of Unusual Items On Profit
HM International Holdings' profit was reduced by unusual items worth HK$2.6m in the last twelve months, and this helped it produce high cash conversion, as reflected by its unusual items. In a scenario where those unusual items included non-cash charges, we'd expect to see a strong accrual ratio, which is exactly what has happened in this case. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If HM International Holdings doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.
Our Take On HM International Holdings' Profit Performance
In conclusion, both HM International Holdings' accrual ratio and its unusual items suggest that its statutory earnings are probably reasonably conservative. Based on these factors, we think HM International Holdings' underlying earnings potential is as good as, or probably even better, than the statutory profit makes it seem! With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For instance, we've identified 3 warning signs for HM International Holdings (2 don't sit too well with us) you should be familiar with.
After our examination into the nature of HM International Holdings' profit, we've come away optimistic for the company. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.
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.
HM国际控股有限公司(HKG：8416)最近公布了一些强劲的收益，市场反应积极。我们已经做了一些分析，我们发现了利润数字以外的几个积极因素。
查看我们对HM国际控股公司的最新分析
联交所：8416盈利及收入历史2022年8月11日
考察现金流量与HM国际控股公司收益的关系
在高端金融领域，衡量一家公司将报告利润转换为自由现金流(FCF)的程度的关键比率是应计比率(来自现金流)。简单地说，这个比率是从净利润中减去FCF，然后用这个数字除以该公司在此期间的平均运营资产。这一比率向我们展示了一家公司的利润超过其固定现金流的程度。
因此，当一家公司的应计比率为负时，它实际上被认为是一件好事，但如果它的应计比率为正，那就是一件坏事。虽然应计比率高于零并不令人担忧，但我们确实认为，当一家公司的应计比率相对较高时，这一点值得注意。引用勒维伦和雷苏泰克2014年的一篇论文，“应计利润较高的公司未来的利润往往较低”。
在截至2022年6月的12个月内，HM International Holdings的应计比率为-0.23。这表明它的自由现金流大大超过了它的法定利润。事实上，该公司去年的自由现金流为2000万港元，远高于其1070万港元的法定利润。HM International Holdings的自由现金流在过去一年有所改善，总体来说是好的。然而，这并不是需要考虑的全部问题。我们可以看到，不寻常的项目影响了其法定利润，从而影响了应计比率。
注：我们总是建议投资者检查资产负债表的实力。点击此处查看我们对HM国际控股公司的资产负债表分析。
异常项目对利润的影响
在过去12个月中，HM International Holdings的利润因价值260万港元的不寻常项目而减少，这帮助其产生了较高的现金转换率，其不寻常项目反映了这一点。在这些不寻常的项目包括非现金费用的情况下，我们预计会看到强劲的应计比率，这正是本案中发生的情况。虽然最初由于不寻常的项目而扣除的金额令人失望，但也有一线希望。我们查看了数千家上市公司，发现不寻常的项目往往是一次性的。考虑到这些项目被认为是不寻常的，这并不令人惊讶。如果HM International Holdings没有看到这些不寻常的支出重演，那么在其他条件相同的情况下，我们预计其利润在未来一年将有所增长。
我们对HM国际控股公司利润表现的看法
总而言之，HM International Holdings的应计比率和不寻常的项目都表明，其法定收益可能相当保守。基于这些因素，我们认为HM国际控股的潜在收益潜力与法定利润看起来一样好，甚至可能更好！考虑到这一点，除非我们对风险有透彻的了解，否则我们不会考虑投资股票。例如，我们已经确定HM国际控股公司的3个警告信号不要和我们坐得太好)你应该熟悉。
在我们调查了HM国际控股公司的利润性质后，我们对该公司持乐观态度。但如果你有能力将注意力集中在细枝末节上，总会有更多的东西需要发现。一些人认为，高股本回报率是高质量企业的良好标志。所以你可能想看看这个免费拥有高股本回报率的公司的集合，或内部人士正在购买的这份股票清单。
对这篇文章有什么反馈吗？担心内容吗？ 保持联系直接与我们联系。或者，也可以给编辑组发电子邮件，地址是implywallst.com。
本文由Simply Wall St.撰写，具有概括性。我们仅使用不偏不倚的方法提供基于历史数据和分析师预测的评论，我们的文章并不打算作为财务建议。它不构成买卖任何股票的建议，也没有考虑你的目标或你的财务状况。我们的目标是为您带来由基本面数据驱动的长期重点分析。请注意，我们的分析可能不会将最新的对价格敏感的公司公告或定性材料考虑在内。Simply Wall St.对上述任何一只股票都没有持仓。
