Some China Primary Energy Holdings (HKG:8117) Shareholders Have Taken A Painful 80% Share Price Drop
Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Anyone who held China Primary Energy Holdings Limited (HKG:8117) for five years would be nursing their metaphorical wounds since the share price dropped 80% in that time. And some of the more recent buyers are probably worried, too, with the stock falling 48% in the last year. Furthermore, it's down 33% in about a quarter. That's not much fun for holders. But this could be related to the weak market, which is down 15% in the same period.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Check out our latest analysis for China Primary Energy Holdings
China Primary Energy Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over half a decade China Primary Energy Holdings reduced its trailing twelve month revenue by 4.3% for each year. That's not what investors generally want to see. If a business loses money, you want it to grow, so no surprises that the share price has dropped 28% each year in that time. We're generally averse to companies with declining revenues, but we're not alone in that. Fear of becoming a 'bagholder' may be keeping people away from this stock.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We regret to report that China Primary Energy Holdings shareholders are down 48% for the year. Unfortunately, that's worse than the broader market decline of 18%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 28% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with China Primary Energy Holdings (including 1 which is can't be ignored) .
Of course China Primary Energy Holdings 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.
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.
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. Thank you for reading.
