Should You Be Adding Beijing Tong Ren Tang Chinese Medicine (HKG:3613) To Your Watchlist Today? – Yahoo Finance

It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money. But as Warren Buffett has mused, ‘If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.’ When they buy such story stocks, investors are all too often the patsy.

HKG:3613). While that doesn’t make the shares worth buying at any price, you can’t deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for Beijing Tong Ren Tang Chinese Medicine

How Quickly Is Beijing Tong Ren Tang Chinese Medicine Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. That makes EPS growth an attractive quality for any company. Beijing Tong Ren Tang Chinese Medicine managed to grow EPS by 16% per year, over three years. That’s a good rate of growth, if it can be sustained.

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. While we note Beijing Tong Ren Tang Chinese Medicine’s EBIT margins were flat over the last year, revenue grew by a solid 12% to HK$1.6b. That’s a real positive.

You can take a look at the company’s revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

our visualization of consensus analyst forecasts for future Beijing Tong Ren Tang Chinese Medicine EPS 100% free.

Are Beijing Tong Ren Tang Chinese Medicine Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. 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.

The good news for Beijing Tong Ren Tang Chinese Medicine shareholders is that no insiders reported selling shares in the last year. With that in mind, it’s heartening that Yong Ding, the Chairman of the company, paid HK$208k for shares at around HK$10.40 each.

I do like that insiders have been buying shares in Beijing Tong Ren Tang Chinese Medicine, but there is more evidence of shareholder friendly management. Specifically, the CEO is paid quite reasonably for a company of this size. For companies with market capitalizations between HK$7.8b and HK$25b, like Beijing Tong Ren Tang Chinese Medicine, the median CEO pay is around HK$4.2m.

The CEO of Beijing Tong Ren Tang Chinese Medicine only received HK$1.7m in total compensation for the year ending December 2018. That’s clearly well below average, so at a glance, that arrangement seems generous to shareholders, and points to a modest remuneration culture. While the level of CEO compensation isn’t a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.