Shenzhen Guangju Energy (SZSE:000096) has had a rough three months with its share price down 17%. It seems that the market might have completely ignored the positive aspects of the company's fundamentals and decided to weigh-in more on the negative aspects. Fundamentals usually dictate market outcomes so it makes sense to study the company's financials. Specifically, we decided to study Shenzhen Guangju Energy's ROE in this article.
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.
View our latest analysis for Shenzhen Guangju Energy
How Is ROE Calculated?
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Shenzhen Guangju Energy is:
2.5% = CN¥64m ÷ CN¥2.6b (Based on the trailing twelve months to June 2022).
The 'return' is the profit over the last twelve months. That means that for every CN¥1 worth of shareholders' equity, the company generated CN¥0.02 in profit.
What Has ROE Got To Do With Earnings Growth?
So far, we've learned that ROE is a measure of a company's profitability. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.
A Side By Side comparison of Shenzhen Guangju Energy's Earnings Growth And 2.5% ROE
As you can see, Shenzhen Guangju Energy's ROE looks pretty weak. Even when compared to the industry average of 17%, the ROE figure is pretty disappointing. Given the circumstances, the significant decline in net income by 20% seen by Shenzhen Guangju Energy over the last five years is not surprising. We reckon that there could also be other factors at play here. For example, the business has allocated capital poorly, or that the company has a very high payout ratio.
However, when we compared Shenzhen Guangju Energy's growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 21% in the same period. This is quite worrisome.
SZSE:000096 Past Earnings Growth September 30th 2022
The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Has the market priced in the future outlook for 000096? You can find out in our latest intrinsic value infographic research report
Is Shenzhen Guangju Energy Using Its Retained Earnings Effectively?
When we piece together Shenzhen Guangju Energy's low three-year median payout ratio of 9.1% (where it is retaining 91% of its profits), calculated for the last three-year period, we are puzzled by the lack of growth. The low payout should mean that the company is retaining most of its earnings and consequently, should see some growth. So there might be other factors at play here which could potentially be hampering growth. For instance, the business has faced some headwinds.
In addition, Shenzhen Guangju Energy has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth.
Conclusion
In total, we're a bit ambivalent about Shenzhen Guangju Energy's performance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. Wrapping up, we would proceed with caution with this company and one way of doing that would be to look at the risk profile of the business. Our risks dashboard would have the 4 risks we have identified for Shenzhen Guangju Energy.
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深圳光聚能源(SZSE:000096)经历了艰难的三个月,股价下跌了17%。市场似乎完全忽视了该公司基本面的积极方面,而决定更多地关注负面方面。基本面通常决定市场结果,因此研究该公司的财务状况是有意义的。具体地说,我们决定在本文中研究深圳光聚能源的净资产收益率。
股本回报率(ROE)是用来评估公司管理层利用公司资本效率的关键指标。换句话说,它揭示了该公司成功地将股东投资转化为利润。
查看我们对深圳光聚能源的最新分析
净资产收益率是如何计算的?
这个净资产收益率公式是:
股本回报率=(持续经营的)净利润?股东权益
因此,根据上述公式,深圳光聚能源的净资产收益率为:
2.5%=CN元6400万×CN元26亿元(基于截至2022年6月的12个月)。
“收益”是过去12个月的利润。这意味着,股东权益每增加1元,公司就会产生0.02元的利润。
净资产收益率与盈利增长有什么关系?
到目前为止,我们了解到净资产收益率是衡量一家公司盈利能力的指标。根据公司将这些利润再投资或“保留”多少,以及这样做的效率如何,我们就能够评估一家公司的收益增长潜力。假设其他条件不变,净资产收益率和利润保留率越高,与不一定具有这些特征的公司相比,公司的增长率就越高。
深圳光聚能源盈利增长与净资产收益率2.5%的并列比较
如你所见,深圳光聚能源的净资产收益率看起来相当疲软。即使与行业平均水平17%相比,净资产收益率也是相当令人失望的。在这种情况下,深圳光聚能源在过去五年中净收入大幅下降20%并不令人意外。我们认为,可能还有其他因素在起作用。例如,企业的资本配置不佳,或者公司的派息率非常高。
然而,当我们将深圳光聚能源的增长与行业进行比较时发现,在公司盈利一直在缩水的同时,行业同期的盈利增长了21%。这相当令人担忧。
深圳证交所:2022年9月30日收益增长000096
赋予一家公司价值的基础在很大程度上与其盈利增长挂钩。投资者应该尝试确定预期的收益增长或下降是否已计入价格,无论是哪种情况。通过这样做,他们将知道股票是将进入清澈的蓝色水域,还是等待沼泽水域。市场是否已经消化了000096的未来前景?您可以在我们最新的内在价值信息图研究报告中找到答案
深圳光聚能源是否有效利用其留存收益?
当我们把深圳光聚能源过去三年计算的9.1%的低三年中值派息率(该公司保留了91%的利润)拼凑在一起时,我们对增长乏力感到困惑。较低的派息应该意味着该公司保留了大部分收益,因此应该会看到一些增长。因此,可能还有其他因素在起作用,可能会阻碍经济增长。例如,该业务一直面临一些不利因素。
此外,深圳光聚能源在至少十年的时间里一直在分红,这表明保持分红对管理层来说要重要得多,即使这是以牺牲业务增长为代价的。
结论
总体而言,我们对深圳光聚能源的表现有些矛盾。尽管它似乎保留了大部分利润,但鉴于净资产收益率较低,投资者可能终究不会从所有这些再投资中受益。低收益增长率表明我们的理论是正确的。总而言之,我们将谨慎对待这家公司,其中一种方法是查看业务的风险概况。我们的风险仪表板将包含我们为深圳光聚能源确定的4个风险。
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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。