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China Water Affairs Group (HKG:855) shareholders notch a 26% return over 1 year, yet earnings have been shrinking

Simply Wall St · 01/08 22:19

It hasn't been the best quarter for China Water Affairs Group Limited (HKG:855) shareholders, since the share price has fallen 14% in that time. Looking on the brighter side, the stock is actually up over twelve months. However, its return of 19% does fall short of the market return of, 40%.

The past week has proven to be lucrative for China Water Affairs Group investors, so let's see if fundamentals drove the company's one-year performance.

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There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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).

During the last year, China Water Affairs Group actually saw its earnings per share drop 39%.

Given the share price gain, we doubt the market is measuring progress with EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

For starters, we suspect the share price has been buoyed by the dividend, which was increased during the year. It could be that the company is reaching maturity and dividend investors are buying for the yield, pushing the price up in the process.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
SEHK:855 Earnings and Revenue Growth January 8th 2026

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for China Water Affairs Group in this interactive graph of future profit estimates.

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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for China Water Affairs Group the TSR over the last 1 year was 26%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

China Water Affairs Group provided a TSR of 26% over the last twelve months. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 1.6% per year over five year. This could indicate that the company is winning over new investors, as it pursues its strategy. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for China Water Affairs Group (1 is a bit concerning!) that you should be aware of before investing here.

China Water Affairs Group is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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