Shareholders are delighted CEFC Hong Kong Financial Investment (HKG: 1520) share price has risen 240%

When you buy shares in a company, there is always a risk that the price will drop to zero. But if you choose the right company to buy stocks, you can earn more than you can lose. For example, the CEFC Hong Kong Financial Investment Company Limited (HKG: 1520) the stock price has climbed 240% in a single year. And last month, the stock price gained 36%. However, long-term returns have not been so impressive, with the stock only rising 1.9% in the past three years.

See our latest analysis for CEFC Hong Kong Financial Investment

CEFC Hong Kong Financial Investment is currently unprofitable, so most analysts would look to revenue growth to get a sense of how fast the underlying business is growing. Generally speaking, companies with no profits are expected to increase their income every year, and at a good rate. Indeed, the rapid growth in income can be easily extrapolated to the expected profits, often of considerable size.

CEFC Hong Kong Financial Investment has actually cut its income over the past year, with a 28% reduction. We’re a little surprised to see the share price climb 240% over the past year. This is a good example of how buyers can push prices up even before fundamental metrics show strong growth. Of course, the market might expect this drop in revenue.

The image below shows how revenue and income have tracked over time (if you click on the image you can see more details).

SEHK: 1520 Revenue and Revenue Growth June 22, 2021

If you are thinking of buying or selling shares of CEFC Hong Kong Financial Investment, you should check this out FREE detailed report on its balance sheet.

A different perspective

It is good to see that CEFC Hong Kong Financial Investment has rewarded its shareholders with a total shareholder return of 240% over the past twelve months. This certainly beats the loss of around 13% per year over the past five years. It makes us a little suspicious, but the company may have changed course. While it is worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider, for example, the ever-present specter of investment risk. We have identified 4 warning signs with CEFC Hong Kong Financial Investment (at least 1 which is significant), and understanding them should be part of your investment process.

If you are like me then you not want to miss it free list of growing companies that insiders buy.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on the Hong Kong stock exchanges.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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