If You Had Bought Siberian Mining Group (HKG:1142) Stock Five Years Ago, You'd Be Sitting On A 91% Loss, Today

·3 min read

Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We don't wish catastrophic capital loss on anyone. For example, we sympathize with anyone who was caught holding Siberian Mining Group Company Limited (HKG:1142) during the five years that saw its share price drop a whopping 91%. We also note that the stock has performed poorly over the last year, with the share price down 73%. The falls have accelerated recently, with the share price down 42% in the last three months.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

See our latest analysis for Siberian Mining Group

Because Siberian Mining Group 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.

Over five years, Siberian Mining Group grew its revenue at 94% per year. That's better than most loss-making companies. So it's not at all clear to us why the share price sunk 38% throughout that time. It could be that the stock was over-hyped before. While there might be an opportunity here, you'd want to take a close look at the balance sheet strength.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SEHK:1142 Income Statement May 22nd 2020
SEHK:1142 Income Statement May 22nd 2020

Take a more thorough look at Siberian Mining Group's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market lost about 3.8% in the twelve months, Siberian Mining Group shareholders did even worse, losing 73%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 38% 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. Case in point: We've spotted 3 warning signs for Siberian Mining Group you should be aware of, and 1 of them is potentially serious.

Of course Siberian Mining Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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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. 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. Thank you for reading.