How does China Renewable Energy Investment Limited’s (HKG:987) profit growth compare to industry results?

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To understand the performance of China Renewable Energy Investment Limited (HKG:987) as a company, one must examine more than just the earnings at one point in time. Today, I will take you through a basic sense check to gain perspective on how China Renewable Energy Investment is doing, assessing its latest earnings in the context of the long-term trend, as well as the performance of its industry peers over the same period.

Check out our latest analysis on renewable energy investment in China

How did the 987 do?

987’s revenue for the last twelve months (to 31 December 2018) was HK$62 million, up 3.2% year-on-year.

However, this annual growth rate was lower than the average earnings growth rate of 26% over the past five years, indicating that 987’s growth rate has slowed. To understand what’s going on, let’s look at what’s happening with margins and whether the industry as a whole is feeling the pressure.

In terms of investment returns, China Renewable Energy Investment has failed to achieve a 20% return on equity (ROE), recording 3.6% instead. Furthermore, the return on assets (ROA) of 3.5% is lower than the Hong Kong renewable energy industry’s 4.3%, indicating that China Renewable Energy Investment is being used less efficiently. However, the return on capital (ROC), which also accounts for China Renewable Energy Investment’s debt levels, has increased from 1.0% to 1.3% over the past 3 years. This correlates with the decline in debt, with the debt-to-equity ratio falling from 41% to 41% over the past 5 years.

What does it mean?

While China Renewable Energy Investment’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as China Renewable Energy Investment, provide investors with confidence. However, the next step would be to assess whether the future looks just as bright. I recommend further research on China Renewable Energy Investment to get a more holistic picture of the stock by looking at:

1. Future perspectives: What do knowledgeable industry analysts predict for 987’s future growth? Check out our free research report on analyst consensus for 987’s outlook.

2. Financial condition: Are 987 operations financially sustainable? Balance sheets can be difficult to analyze, so we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that offer better prospects with proven track records? Check out our free list of these great stocks here.

NOTE: The numbers in this article were calculated using data from the trailing twelve months as of December 31, 2018. These figures may not be consistent with the figures in the annual report for the full year.

Our goal is to provide you with long-term, focused research analysis based on fundamental data. Please note that our analysis may not include the latest price-sensitive company announcements or qualitative material.

If you see an error that needs to be corrected, please contact the editor at [email protected]. This article by Simply Wall St is for general information purposes only. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Simply Wall St has no position in the stocks mentioned. Thanks for reading.