27-05-2025
Is Now The Time To Put Valuetronics Holdings (SGX:BN2) On Your Watchlist?
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Valuetronics Holdings (SGX:BN2). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Valuetronics Holdings with the means to add long-term value to shareholders.
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Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Valuetronics Holdings managed to grow EPS by 5.8% per year, over three years. While that sort of growth rate isn't anything to write home about, it does show the business is growing.
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. While Valuetronics Holdings may have maintained EBIT margins over the last year, revenue has fallen. Suffice it to say that is not a great sign of growth.
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 Valuetronics Holdings
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Valuetronics Holdings' future EPS 100% free.
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. Because often, the purchase of stock is a sign that the buyer views it as undervalued. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
It's nice to see that there have been no reports of any insiders selling shares in Valuetronics Holdings in the previous 12 months. With that in mind, it's heartening that Yuen Weai Liu, the company insider of the company, paid HK$45k for shares at around HK$0.60 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Valuetronics Holdings.
Along with the insider buying, another encouraging sign for Valuetronics Holdings is that insiders, as a group, have a considerable shareholding. Given insiders own a significant chunk of shares, currently valued at HK$86m, they have plenty of motivation to push the business to succeed. That holding amounts to 31% of the stock on issue, thus making insiders influential owners of the business and aligned with the interests of shareholders.
One positive for Valuetronics 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 Valuetronics Holdings (1 is significant!) that we have uncovered.
Keen growth investors love to see insider activity. Thankfully, Valuetronics 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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