South Manganese Investment Limited (HKG:1091) shareholders might be concerned after seeing the share price drop 20% in the last month. But that doesn't change the fact that the returns over the last year have been very strong. Like an eagle, the share price soared 196% in that time. So it is important to view the recent reduction in price through that lense. More important, going forward, is how the business itself is going.
The past week has proven to be lucrative for South Manganese Investment investors, so let's see if fundamentals drove the company's one-year performance.
South Manganese Investment isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last twelve months, South Manganese Investment's revenue grew by 35%. We respect that sort of growth, no doubt. The revenue growth is decent but the share price had an even better year, gaining 196%. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its...
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