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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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.
深圳光聚能源(SZSE:000096)經歷了艱難的三個月,股價下跌了17%。市場似乎完全忽視了該公司基本面的積極方面,而決定更多地關注負面方面。基本面通常決定市場結果,因此研究該公司的財務狀況是有意義的。具體地説,我們決定在本文中研究深圳光聚能源的淨資產收益率。
股本回報率(ROE)是用來評估公司管理層利用公司資本效率的關鍵指標。換句話説,它揭示了該公司成功地將股東投資轉化為利潤。
查看我們對深圳光聚能源的最新分析
淨資產收益率是如何計算的?
這個淨資產收益率公式是:
股本回報率=(持續經營的)淨利潤?股東權益
因此,根據上述公式,深圳光聚能源的淨資產收益率為:
2.5%=CN元6400萬×CN元26億元(基於截至2022年6月的12個月)。
“收益”是過去12個月的利潤。這意味着,股東權益每增加1元,公司就會產生0.02元的利潤。
淨資產收益率與盈利增長有什麼關係?
到目前為止,我們瞭解到淨資產收益率是衡量一家公司盈利能力的指標。根據公司將這些利潤再投資或“保留”多少,以及這樣做的效率如何,我們就能夠評估一家公司的收益增長潛力。假設其他條件不變,淨資產收益率和利潤保留率越高,與不一定具有這些特徵的公司相比,公司的增長率就越高。
深圳光聚能源盈利增長與淨資產收益率2.5%的並列比較
如你所見,深圳光聚能源的淨資產收益率看起來相當疲軟。即使與行業平均水平17%相比,淨資產收益率也是相當令人失望的。在這種情況下,深圳光聚能源在過去五年中淨收入大幅下降20%並不令人意外。我們認為,可能還有其他因素在起作用。例如,企業的資本配置不佳,或者公司的派息率非常高。
然而,當我們將深圳光聚能源的增長與行業進行比較時發現,在公司盈利一直在縮水的同時,行業同期的盈利增長了21%。這相當令人擔憂。
深圳證交所:2022年9月30日收益增長000096
賦予一家公司價值的基礎在很大程度上與其盈利增長掛鈎。投資者應該嘗試確定預期的收益增長或下降是否已計入價格,無論是哪種情況。通過這樣做,他們將知道股票是將進入清澈的藍色水域,還是等待沼澤水域。市場是否已經消化了000096的未來前景?您可以在我們最新的內在價值信息圖研究報告中找到答案
深圳光聚能源是否有效利用其留存收益?
當我們把深圳光聚能源過去三年計算的9.1%的低三年中值派息率(該公司保留了91%的利潤)拼湊在一起時,我們對增長乏力感到困惑。較低的派息應該意味着該公司保留了大部分收益,因此應該會看到一些增長。因此,可能還有其他因素在起作用,可能會阻礙經濟增長。例如,該業務一直面臨一些不利因素。
此外,深圳光聚能源在至少十年的時間裏一直在分紅,這表明保持分紅對管理層來説要重要得多,即使這是以犧牲業務增長為代價的。
結論
總體而言,我們對深圳光聚能源的表現有些矛盾。儘管它似乎保留了大部分利潤,但鑑於淨資產收益率較低,投資者可能終究不會從所有這些再投資中受益。低收益增長率表明我們的理論是正確的。總而言之,我們將謹慎對待這家公司,其中一種方法是查看業務的風險概況。我們的風險儀錶板將包含我們為深圳光聚能源確定的4個風險。
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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。