Linkage Software's (SHSE:688588) Profits Appear To Have Quality Issues
Linkage Software's (SHSE:688588) Profits Appear To Have Quality Issues
The market for Linkage Software Co., LTD's (SHSE:688588) stock was strong after it released a healthy earnings report last week. Despite this, our analysis suggests that there are some factors weakening the foundations of those good profit numbers.
上周发布了健康的盈利报告后,上证科技(688588)的股票市场表现强劲。尽管如此,我们的分析表明,有一些因素在削弱这些良好利润数字的基础。
Examining Cashflow Against Linkage Software's Earnings
审查与上证科技盈利情况相比的现金流量
One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. This ratio tells us how much of a company's profit is not backed by free cashflow.
用于衡量公司将其盈利转换成自由现金流(FCF)的一个关键财务比率是应计比率。为了得出应计比率,我们首先从一个期间的利润中减去FCF,然后将该数字除以期间的平均经营资产。这个比率告诉我们公司利润有多少不受自由现金流支持。
As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative. That is not intended to imply we should worry about a positive accrual ratio, but it's worth noting where the accrual ratio is rather high. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth.
因此,负的应计比率对公司是积极的,而正的应计比率则是消极的。这并不意味着我们应该担心正的应计比率,但值得注意的是应计比率相当高的地方。这是因为一些学术研究表明,高应计比率往往导致较低的利润或利润增长。
For the year to September 2024, Linkage Software had an accrual ratio of 0.22. We can therefore deduce that its free cash flow fell well short of covering its statutory profit. In fact, it had free cash flow of CN¥38m in the last year, which was a lot less than its statutory profit of CN¥165.9m. Linkage Software's free cash flow actually declined over the last year, but it may bounce back next year, since free cash flow is often more volatile than accounting profits. One positive for Linkage Software shareholders is that it's accrual ratio was significantly better last year, providing reason to believe that it may return to stronger cash conversion in the future. Shareholders should look for improved cashflow relative to profit in the current year, if that is indeed the case.
到2024年9月,上证科技的应计比率为0.22。因此我们可以推断,其自由现金流远远不足以覆盖其法定利润。实际上,上一年度其自由现金流为3800万人民币,远低于其法定利润16590万人民币。上证科技的自由现金流实际上在过去一年中下降了,但可能会在明年反弹,因为自由现金流往往比会计利润更为波动。对于上证科技的股东来说,一个积极的因素是去年其应计比率明显更佳,这说明未来可能会恢复更强的现金转换能力。如果确实如此,股东应该期待本年度现金流改善相对于利润。
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Linkage Software.
注:我们始终建议投资者检查资产负债表的强度。点击此处查看我们对上证科技资产负债表的分析。
Our Take On Linkage Software's Profit Performance
我们对Linkage软件的利润表现进行了分析
Linkage Software 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 Linkage Software's statutory profits are better than its underlying earnings power. But at least holders can take some solace from the 59% EPS growth in the last year. 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. If you want to do dive deeper into Linkage Software, you'd also look into what risks it is currently facing. For instance, we've identified 4 warning signs for Linkage Software (3 are concerning) you should be familiar with.
Linkage软件在过去一年中没有将其利润转化为自由现金流,这可能被一些投资者认为相当不理想。因此,我们认为Linkage软件的名义利润可能优于其潜在盈利能力。但至少持有人可以从去年的59%每股收益增长中获得一些安慰。当然,在分析其收益时我们只是刚刚触及了表面;一个人还可以考虑利润率、预测增长、投资回报率等其他因素。如果想要更深入地了解Linkage软件,还应该了解当前面临的风险。例如,我们已经发现了4个Linkage软件的警示信号(其中3个令人担忧),您应该熟悉。
Today we've zoomed in on a single data point to better understand the nature of Linkage Software's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.
今天,我们关注了一个数据点,以更好地了解Linkage软件利润的性质。但如果您能专注于细节,总是可以发现更多。例如,许多人认为高净资产回报率是良好商业经济状况的指标,而其他人则喜欢“跟随资金”的方式,寻找内部人员正在买入的股票。虽然这可能需要您进行一些调查研究,但您可能会发现这些拥有高净资产回报率的公司的免费合集,或者拥有重要内部持股清单会对您有所帮助。
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