StemCell Therapy

It is a pleasure to report that the China Regenerative Medicine International Limited (HKG:8158) is up 129% in the last quarter. But that is meagre solace in the face of the shocking decline over three years. The share price has sunk like a leaky ship, down 95% in that time. So it sure is nice to see a big of an improvement. But the more important question is whether the underlying business can justify a higher price still.

We really feel for shareholders in this scenario. Its a good reminder of the importance of diversification, and its worth keeping in mind theres more to life than money, anyway.

View our latest analysis for China Regenerative Medicine International

Because China Regenerative Medicine International 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. Shareholders of unprofitable companies usually expect strong revenue growth. Thats because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years, China Regenerative Medicine Internationals revenue dropped 26% per year. Thats definitely a weaker result than most pre-profit companies report. And as you might expect the share price has been weak too, dropping at a rate of 64% per year. Never forget that loss making companies with falling revenue can and do cause losses for everyday investors. Its worth remembering that investors call buying a steeply falling share price catching a falling knife because it is a dangerous pass time.

The companys revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Its good to see that there was some significant insider buying in the last three months. Thats a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Dive deeper into the earnings by checking this interactive graph of China Regenerative Medicine Internationals earnings, revenue and cash flow.

China Regenerative Medicine International shareholders are down 81% for the year, but the market itself is up 9.4%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last years performance may indicate unresolved challenges, given that it was worse than the annualised loss of 45% over the last half decade. 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. Like risks, for instance. Every company has them, and weve spotted 5 warning signs for China Regenerative Medicine International (of which 1 shouldnt be ignored!) you should know about.

China Regenerative Medicine International is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.

Read more from the original source:
Those Who Purchased China Regenerative Medicine International (HKG:8158) Shares Three Years Ago Have A 95% Loss To Show For It - Simply Wall St

This entry was posted on January 21, 2020 at 8:46 am and is filed under Regenerative Medicine. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. |