TEE Land Ltd’s 2017 First Quarter Earnings: A Disappointment

Yesterday, real estate developer TEE Land Ltd (SGX: S9B) reported earnings for the first quarter of its fiscal year ending 31 May 2018 (FY2018). The reporting period was for the three months ended 31 August 2017.

The company delivered just S$22,000 in profit attributable to shareholders for the quarter despite raking in S$25.96 million in total revenue.

So, was the market satisfied by these results? The 5.13% rise in TEE Land’s stock price as of the time of writing (2:15 pm) suggests that investors were pretty happy.

More data

Let’s take a bit of a closer look at the key data points from the quarterly report, and how they compare to the previous quarter.

Source: S&P Global Market Intelligence; Sales, profit attributable to shareholders, and operating income in thousands

On the top line, TEE Land showed solid growth year-over-year. Meanwhile, profit attributable to shareholders slumped considerably compared to last year’s results. The company saw its profit attributable to shareholders moving in the opposite direction of sales — which can be a sign that costs are increasing and eating into the bottom-line profitability.

Looking more closely at profitability, we can look at the operating income as a measure of TEE Land’s ongoing profitability (since it ignores one-off issues like acquisitions or write-downs).

As we can see, the operating income increased this quarter when compared to the same quarter last year. Going another step, we can look at the operating margin to get a better look at whether profitability is improving or suffering. In this case, the operating margin declined by 5.7 percentage points, showing that the company’s operations were much less profitable this year versus last year.

Turning to the stock’s valuation, following the earnings report at yesterday’s market close, TEE Land does not have a meaningful price-to-earnings (PE) ratio as its earnings was negative. Meanwhile, it has a price-to-book (PB) ratio of 0.54.

Time to dig in

It’s important to note that for Foolish investors, it’s not just about the EPS numbers and how they have changed from year-on-year. And it’s definitely not about the one-day stock-price movement! But, following an earnings report, this can be a good starting point for understanding how the quarter ended up for a company, and why the stock moved the way it did following the earnings release.

Now that you’ve got the basic overview of what happened during the quarter, you can head to the company’s investor relations page to do a more in-depth read of the quarterly report. This will help you better understand why TEE Land’s earnings fell off a cliff and whether you should be concerned.

Of course, it’s also important to remember that a single quarterly report is a very short period of time for any company. Sometimes major changes can occur between one quarter and the next, but normally it’s better for investors to take a single quarterly report with a grain of salt and keep their view fixed on the big picture.

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Disclosure: The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing does not own shares in any companies mentioned.