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Hai Leck Holding is a stellar performer in SGX
- Thread starter k1976
- Start date
Hai Leck Holdings (SGX:BLH) has had a great run on the share market with its stock up by a significant 33% over the last week. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to study its financial indicators more closely to see if they had a hand to play in the recent price move. Particularly, we will be paying attention to Hai Leck Holdings' ROE today.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.
Why Is ROE Important For Earnings Growth?
Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.Hai Leck Holdings' Earnings Growth And 4.0% ROE
At first glance, Hai Leck Holdings' ROE doesn't look very promising. A quick further study shows that the company's ROE doesn't compare favorably to the industry average of 6.1% either. However, we we're pleasantly surprised to see that Hai Leck Holdings grew its net income at a significant rate of 38% in the last five years. Therefore, there could be other reasons behind this growth. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio.As a next step, we compared Hai Leck Holdings' net income growth with the industry and found that the company has a similar growth figure when compared with the industry average growth rate of 38% in the same period.
Is Hai Leck Holdings Efficiently Re-investing Its Profits?
While the company did pay out a portion of its dividend in the past, it currently doesn't pay a dividend. This is likely what's driving the high earnings growth number discussed above.Summary
Overall, we feel that Hai Leck Holdings certainly does have some positive factors to consider. Even in spite of the low rate of return, the company has posted impressive earnings growth as a result of reinvesting heavily into its business. So far, we've only made a quick discussion around the company's earnings growth. You can do your own research on Hai Leck Holdings and see how it has performed in the past by looking at this FREE detailed graph of past earnings, revenue and cash flows.
Tiagong , her portfolio holding raise in tantum. 
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