With A -13% Earnings Drop, Did Sinwa Limited (SGX:5CN) Really Underperform?
For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Sinwa Limited (SGX:5CN) useful as an attempt to give more color around how Sinwa is currently performing.
See our latest analysis for Sinwa
Was 5CN weak performance lately part of a long-term decline?
5CN is loss-making, with the most recent trailing twelve-month earnings of -S$5.0m (from 31 December 2018), which compared to last year has become more negative. Over the past five years, its average earnings level was positive at S$2.9m, which meant its expenses has only exceeded revenues recently, pulling 5CN into the loss-making zone.
Each year, for the past five years 5CN has seen an annual decline in revenue of -5.6%, on average. This adverse movement is a driver of the company's inability to reach breakeven.
Eyeballing growth from a sector-level, the SG infrastructure industry has been growing, albeit, at a subdued single-digit rate of 2.7% in the previous year,
Even though Sinwa is currently unprofitable, its has a long cash runway to meet its upcoming operating expenses should this remain constant at the current level of S$4.6m (SG&A and one-year R&D) . This is a strong indication of good cash management.
What does this mean?
Though Sinwa's past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most insightful step is to assess company-specific issues Sinwa may be facing and whether management guidance has dependably been met in the past. You should continue to research Sinwa to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 5CN’s future growth? Take a look at our free research report of analyst consensus for 5CN’s outlook.
Financial Health: Are 5CN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
