This week we saw the Jiangxi Haiyuan Composites Technology Co.,Ltd. (SZSE:002529) share price climb by 24%. But that doesn't change the fact that the returns over the last year have been disappointing. During that time the share price has sank like a stone, descending 59%. The share price recovery is not so impressive when you consider the fall. You could argue that the sell-off was too severe.

On a more encouraging note the company has added CN¥385m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Because Jiangxi Haiyuan Composites TechnologyLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Jiangxi Haiyuan Composites TechnologyLtd grew its revenue by 12% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Without profits, and with revenue growth sluggish, you get a 59% loss for shareholders, over the year. Like many holders, we really want to see better revenue growth in companies that lose money. When a stock falls hard like this, it can signal an over-reaction. Our preference is to wait for a fundamental improvements before buying, but now could be a good time for some research.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Jiangxi Haiyuan Composites TechnologyLtd's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 20% in the twelve months, Jiangxi Haiyuan Composites TechnologyLtd shareholders did even worse, losing 59%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.6% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Jiangxi Haiyuan Composites TechnologyLtd , and understanding them should be part of your investment process.

But note: Jiangxi Haiyuan Composites TechnologyLtd may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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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.