Here's Why APM Automotive Holdings Berhad (KLSE:APM) Has Caught The Eye Of Investors
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in APM Automotive Holdings Berhad (KLSE:APM). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide APM Automotive Holdings Berhad with the means to add long-term value to shareholders.
See our latest analysis for APM Automotive Holdings Berhad
APM Automotive Holdings Berhad's Improving Profits
APM Automotive Holdings Berhad has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Impressively, APM Automotive Holdings Berhad's EPS catapulted from RM0.15 to RM0.36, over the last year. It's a rarity to see 146% year-on-year growth like that.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. APM Automotive Holdings Berhad shareholders can take confidence from the fact that EBIT margins are up from 2.8% to 5.1%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
Since APM Automotive Holdings Berhad is no giant, with a market capitalisation of RM577m, you should definitely check its cash and debt before getting too excited about its prospects.
Are APM Automotive Holdings Berhad Insiders Aligned With All Shareholders?
It should give investors a sense of security owning shares in a company if insiders also own shares, creating a close alignment their interests. APM Automotive Holdings Berhad followers will find comfort in knowing that insiders have a significant amount of capital that aligns their best interests with the wider shareholder group. As a matter of fact, their holding is valued at RM142m. This considerable investment should help drive long-term value in the business. Those holdings account for over 25% of the company; visible skin in the game.
Does APM Automotive Holdings Berhad Deserve A Spot On Your Watchlist?
APM Automotive Holdings Berhad's earnings have taken off in quite an impressive fashion. That EPS growth certainly is attention grabbing, and the large insider ownership only serves to further stoke our interest. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering APM Automotive Holdings Berhad for a spot on your watchlist. It is worth noting though that we have found 1 warning sign for APM Automotive Holdings Berhad that you need to take into consideration.
There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a tailored list of Malaysian companies which have demonstrated growth backed by significant insider holdings.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com