The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
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 XMH Holdings (SGX:9PQ). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide XMH Holdings with the means to add long-term value to shareholders.
XMH Holdings' Improving Profits
XMH Holdings 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. XMH Holdings' EPS has risen over the last 12 months, growing from S$0.058 to S$0.072. This amounts to a 24% gain; a figure that shareholders will be pleased to see.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. XMH Holdings maintained stable EBIT margins over the last year, all while growing revenue 11% to S$185m. That's a real positive.
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
View our latest analysis for XMH Holdings
Since XMH Holdings is no giant, with a market capitalisation of S$118m, you should definitely check its cash and debt before getting too excited about its prospects.
Are XMH Holdings Insiders Aligned With All Shareholders?
It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.
Even though there was some insider selling over the last year, that was outweighed by Chairman & MD Tin Yeow Tan's huge outlay of S$3.9m, spent buying shares. The average price paid was about S$0.44. Insider buying like this is a rare occurrence and should stoke the interest of the market and shareholders alike.
On top of the insider buying, we can also see that XMH Holdings insiders own a large chunk of the company. To be exact, company insiders hold 88% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about S$104m riding on the stock, at current prices. That should be more than enough to keep them focussed on creating shareholder value!
Is XMH Holdings Worth Keeping An Eye On?
One positive for XMH Holdings is that it is growing EPS. That's nice to see. Better yet, insiders are significant shareholders, and have been buying more shares. That makes the company a prime candidate for your watchlist - and arguably a research priority. Before you take the next step you should know about the 2 warning signs for XMH Holdings that we have uncovered.
Keen growth investors love to see insider activity. Thankfully, XMH Holdings isn't the only one. You can see a a curated list of Singaporean companies which have exhibited consistent growth accompanied by high insider ownership.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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