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.
现代中药集团有限公司(HKG: 1643)上周公布的财报乏善可陈,但没有使股价下跌。我们认为,投资者担心收益背后的一些弱点。
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Zooming In On Modern Chinese Medicine Group's Earnings
放大现代中药集团的收益
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.
许多投资者尚未听说过现金流的应计比率,但它实际上是衡量公司在给定时期内自由现金流(FCF)在多大程度上支持利润的有用指标。简而言之,该比率从净利润中减去FCF,然后将该数字除以该时期公司的平均运营资产。这个比率告诉我们,一家公司的利润中有多少没有自由现金流的支持。
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.
这意味着负应计比率是一件好事,因为它表明该公司带来的自由现金流比其利润所暗示的要多。虽然正应计比率表明非现金利润达到一定水平不是问题,但高应计比率可以说是一件坏事,因为它表明纸面利润与现金流不匹配。这是因为一些学术研究表明,高应计率往往会导致利润下降或利润增长减弱。
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,现代中药集团的应计比率为0.28。因此,我们可以推断出其自由现金流远不足以支付其法定利润。事实上,在过去的十二个月中,该公司报告的自由现金流为340万元人民币,大大低于其4,880万元人民币的利润。毫无疑问,现代中药集团的股东们将希望其自由现金流能够在明年反弹,因为在过去的十二个月中一直处于下降状态。对股东来说,好消息是,现代中药集团去年的应计比率要好得多,因此今年的糟糕数据可能只是利润与FCF之间短期不匹配的情况。因此,一些股东可能希望在本年度实现更强的现金转换。
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:我们始终建议投资者检查资产负债表的实力。点击此处查看我们对现代中药集团的资产负债表分析。
Our Take On Modern Chinese Medicine Group's Profit Performance
我们对现代中药集团盈利表现的看法
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,现代中药集团没有将其大部分利润转换为自由现金流,一些投资者可能认为这种情况相当不理想。因此,我们认为现代中药集团的法定利润可能好于其基础盈利能力。不幸的是,在过去的十二个月中,其每股收益有所下降。当然,我们只是在分析其收益时才浮出水面;人们还可以考虑利润率、预测增长和投资回报率等因素。考虑到这一点,除非我们对风险有透彻的了解,否则我们不会考虑投资股票。当我们进行研究时,我们发现现代中医集团有4个警告信号(其中一个令人担忧!)我们认为值得你全神贯注。
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.
这份报告只研究了揭示现代中药集团利润性质的单一因素。但是,如果你能够将注意力集中在细节上,总会有更多的事情需要发现。有些人认为高股本回报率是优质业务的好兆头。因此,你可能希望看到这份免费收藏的拥有高股本回报率的公司,或者这份内部人士正在购买的股票清单。
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Simply Wall St的这篇文章本质上是笼统的。我们仅使用公正的方法根据历史数据和分析师的预测提供评论,我们的文章无意作为财务建议。它不构成买入或卖出任何股票的建议,也没有考虑到您的目标或财务状况。我们的目标是为您提供由基本数据驱动的长期重点分析。请注意,我们的分析可能不考虑最新的价格敏感型公司公告或定性材料。简而言之,华尔街没有持有任何上述股票的头寸。