Investors ignore increasing losses at China Anchu Energy Storage Group (HKG:2399) as stock jumps 4.3% this past week

Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example China Anchu Energy Storage Group Limited (HKG:2399). Its share price is already up an impressive 200% in the last twelve months. Also pleasing for shareholders was the 45% gain in the last three months. Looking back further, the stock price is 31% higher than it was three years ago.

The past week has proven to be lucrative for China Anchu Energy Storage Group investors, so let's see if fundamentals drove the company's one-year performance.

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Given that China Anchu Energy Storage Group didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last year China Anchu Energy Storage Group saw its revenue shrink by 50%. We're a little surprised to see the share price pop 200% in the last year. It just goes to show the market doesn't always pay attention to the reported numbers. It's quite likely the revenue fall was already priced in, anyway.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of China Anchu Energy Storage Group's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that China Anchu Energy Storage Group shareholders have received a total shareholder return of 200% over the last year. Notably the five-year annualised TSR loss of 12% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. To that end, you should be aware of the 3 warning signs we've spotted with China Anchu Energy Storage Group .

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

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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.