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.
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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.
HM國際控股有限公司(HKG：8416)最近公佈了一些強勁的收益，市場反應積極。我們已經做了一些分析，我們發現了利潤數字以外的幾個積極因素。
查看我們對HM國際控股公司的最新分析
聯交所：8416盈利及收入歷史2022年8月11日
考察現金流量與HM國際控股公司收益的關係
在高端金融領域，衡量一家公司將報告利潤轉換為自由現金流(FCF)的程度的關鍵比率是應計比率(來自現金流)。簡單地説，這個比率是從淨利潤中減去FCF，然後用這個數字除以該公司在此期間的平均運營資產。這一比率向我們展示了一家公司的利潤超過其固定現金流的程度。
因此，當一家公司的應計比率為負時，它實際上被認為是一件好事，但如果它的應計比率為正，那就是一件壞事。雖然應計比率高於零並不令人擔憂，但我們確實認為，當一家公司的應計比率相對較高時，這一點值得注意。引用勒維倫和雷蘇泰克2014年的一篇論文，“應計利潤較高的公司未來的利潤往往較低”。
在截至2022年6月的12個月內，HM International Holdings的應計比率為-0.23。這表明它的自由現金流大大超過了它的法定利潤。事實上，該公司去年的自由現金流為2000萬港元，遠高於其1070萬港元的法定利潤。HM International Holdings的自由現金流在過去一年有所改善，總體來説是好的。然而，這並不是需要考慮的全部問題。我們可以看到，不尋常的項目影響了其法定利潤，從而影響了應計比率。
注：我們總是建議投資者檢查資產負債表的實力。點擊此處查看我們對HM國際控股公司的資產負債表分析。
異常項目對利潤的影響
在過去12個月中，HM International Holdings的利潤因價值260萬港元的不尋常項目而減少，這幫助其產生了較高的現金轉換率，其不尋常項目反映了這一點。在這些不尋常的項目包括非現金費用的情況下，我們預計會看到強勁的應計比率，這正是本案中發生的情況。雖然最初由於不尋常的項目而扣除的金額令人失望，但也有一線希望。我們查看了數千家上市公司，發現不尋常的項目往往是一次性的。考慮到這些項目被認為是不尋常的，這並不令人驚訝。如果HM International Holdings沒有看到這些不尋常的支出重演，那麼在其他條件相同的情況下，我們預計其利潤在未來一年將有所增長。
我們對HM國際控股公司利潤表現的看法
總而言之，HM International Holdings的應計比率和不尋常的項目都表明，其法定收益可能相當保守。基於這些因素，我們認為HM國際控股的潛在收益潛力與法定利潤看起來一樣好，甚至可能更好！考慮到這一點，除非我們對風險有透徹的瞭解，否則我們不會考慮投資股票。例如，我們已經確定HM國際控股公司的3個警告信號不要和我們坐得太好)你應該熟悉。
在我們調查了HM國際控股公司的利潤性質後，我們對該公司持樂觀態度。但如果你有能力將注意力集中在細枝末節上，總會有更多的東西需要發現。一些人認為，高股本回報率是高質量企業的良好標誌。所以你可能想看看這個免費擁有高股本回報率的公司的集合，或內部人士正在購買的這份股票清單。
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本文由Simply Wall St.撰寫，具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論，我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議，也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意，我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。
