Earnings Troubles May Signal Larger Issues for Modern Chinese Medicine Group (HKG:1643) Shareholders
Earnings Troubles May Signal Larger Issues for Modern Chinese Medicine Group (HKG:1643) Shareholders
A lackluster earnings announcement from Modern Chinese Medicine Group Co., Ltd. (HKG:1643) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.
現代中藥集團有限公司(HKG: 1643)上週公佈的業績乏善可陳,但沒有使股價下跌。我們認爲,投資者擔心收益背後的一些弱點。
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Zooming In On Modern Chinese Medicine Group's Earnings
放大現代中藥集團的收益
Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. In plain english, this ratio subtracts FCF from net profit, and divides that number by the company's average operating assets over that period. This ratio tells us how much of a company's profit is not backed by free cashflow.
許多投資者尚未聽說過現金流的應計比率,但它實際上是衡量公司在給定時期內自由現金流(FCF)在多大程度上支持利潤的有用指標。簡而言之,該比率從淨利潤中減去FCF,然後將該數字除以該時期公司的平均運營資產。這個比率告訴我們,一家公司的利潤中有多少沒有自由現金流的支持。
That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
這意味着負應計比率是一件好事,因爲它表明該公司帶來的自由現金流比其利潤所暗示的要多。雖然正應計比率表明非現金利潤達到一定水平不是問題,但高應計比率可以說是一件壞事,因爲它表明紙面利潤與現金流不匹配。這是因爲一些學術研究表明,高應計率往往會導致利潤下降或利潤增長減弱。
For the year to December 2023, Modern Chinese Medicine Group had an accrual ratio of 0.28. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. Indeed, in the last twelve months it reported free cash flow of CN¥3.4m, which is significantly less than its profit of CN¥48.8m. Modern Chinese Medicine Group shareholders will no doubt be hoping that its free cash flow bounces back next year, since it was down over the last twelve months. The good news for shareholders is that Modern Chinese Medicine Group's accrual ratio was much better last year, so this year's poor reading might simply be a case of a short term mismatch between profit and FCF. As a result, some shareholders may be looking for stronger cash conversion in the current year.
截至2023年12月的一年中,現代中藥集團的應計比率爲0.28。因此,我們可以推斷出其自由現金流遠不足以支付其法定利潤。事實上,在過去的十二個月中,該公司報告的自由現金流爲340萬元人民幣,大大低於其4,880萬元人民幣的利潤。毫無疑問,現代中藥集團的股東們將希望其自由現金流能夠在明年反彈,因爲在過去的十二個月中一直處於下降狀態。對股東來說,好消息是,現代中藥集團去年的應計比率要好得多,因此今年的糟糕數據可能只是利潤與FCF之間短期不匹配的情況。因此,一些股東可能希望在本年度實現更強的現金轉換。
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Modern Chinese Medicine Group.
注意:我們始終建議投資者檢查資產負債表的實力。點擊此處查看我們對現代中藥集團的資產負債表分析。
Our Take On Modern Chinese Medicine Group's Profit Performance
我們對現代中藥集團盈利表現的看法
Modern Chinese Medicine Group didn't convert much of its profit to free cash flow in the last year, which some investors may consider rather suboptimal. Because of this, we think that it may be that Modern Chinese Medicine Group's statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. When we did our research, we found 4 warning signs for Modern Chinese Medicine Group (1 is concerning!) that we believe deserve your full attention.
去年,現代中藥集團沒有將其大部分利潤轉換爲自由現金流,一些投資者可能認爲這種情況相當不理想。因此,我們認爲現代中藥集團的法定利潤可能好於其基礎盈利能力。不幸的是,在過去的十二個月中,其每股收益有所下降。當然,我們只是在分析其收益時才浮出水面;人們還可以考慮利潤率、預測增長和投資回報率等因素。考慮到這一點,除非我們對風險有透徹的了解,否則我們不會考慮投資股票。當我們進行研究時,我們發現現代中醫集團有4個警告信號(其中一個令人擔憂!)我們認爲值得你全神貫注。
This note has only looked at a single factor that sheds light on the nature of Modern Chinese Medicine Group's profit. 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.
這份報告只研究了揭示現代中藥集團利潤性質的單一因素。但是,如果你能夠將注意力集中在細節上,總會有更多的事情需要發現。有些人認爲高股本回報率是優質業務的好兆頭。因此,你可能希望看到這份免費收藏的擁有高股本回報率的公司,或者這份內部人士正在購買的股票清單。
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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.
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Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。