Even after rising 8.5% this past week, Yuexiu Real Estate Investment Trust (HKG:405) shareholders are still down 57% over the past three years

Yuexiu Real Estate Investment Trust (HKG:405) shareholders should be happy to see the share price up 17% in the last month. Meanwhile over the last three years the stock has dropped hard. At that time, the share price dropped 65%. So the improvement may be a real relief to some. The rise has some hopeful, but turnarounds are often precarious.

While the stock has risen to 8.5% in the past week but long term shareholders are still in the red, let’s see what the fundamentals can tell us.

Check out the opportunities and risks within the HK REITs industry.

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Over the three years that the share price declined, Yuexiu Real Estate Investment Trust’s earnings per share (EPS) dropped significantly, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it’s not easy to use EPS as a reliable guide to the business. However, we can say we’d expect to see a falling share price in this scenario.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

SEHK:405 Earnings Per Share Growth November 19th 2022

Dive deeper into Yuexiu Real Estate Investment Trust’s key metrics by checking this interactive graph of Yuexiu Real Estate Investment Trust’s earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Yuexiu Real Estate Investment Trust the TSR over the last 3 years was -57%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

We regret to report that Yuexiu Real Estate Investment Trust shareholders are down 41% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 23%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualized loss of 9% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we’ve discovered 3 warning signs for Yuexiu Real Estate Investment Trust (2 make us uncomfortable!) that you should be aware of before investing here.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

Valuation is complex, but we’re helping make it simple.

Find out whether Yuexiu Real Estate Investment Trust is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.