Longshine Technology Group (SZSE:300682) has seen a significant 42% increase in its stock price over the last three months on the share market. The company’s Return on Equity (ROE) is currently at 6.2%, indicating the profit each dollar generates with respect to shareholder investments. While Longshine Technology Group’s ROE is higher than the industry average of 4.5%, its five-year net income decline rate is at 10%, which could be impacting its earnings growth.
The company has a low three-year median payout ratio of 17%, suggesting that it is retaining 83% of its profits for reinvestment. However, despite the high reinvestment rate, the lack of growth in earnings is a cause for concern. The company has been paying dividends for seven years, indicating a preference for dividend payments even as earnings decline.
Analysts expect Longshine Technology Group’s future payout ratio to rise to 22% over the next three years, while ROE is expected to increase to 9.5%. This suggests that there could be other factors at play driving the anticipated growth in ROE. Overall, the company has positive attributes, but the lack of earnings growth despite a moderate ROE and high reinvestment rate raises concerns.
Analysts predict a significant improvement in the company’s earnings growth rate in the future. Investors are advised to conduct further research and analysis before making investment decisions.
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