CHTC Fong's International Co (HKSE:00641) Predictability Rank

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What is CHTC Fong's International Co Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

CHTC Fong's International Co Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

CHTC Fong's International Co Predictability Rank Related Terms

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CHTC Fong's International Co Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » CHTC Fong's International Co Ltd (HKSE:00641) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

1018 Tai Nan West Street, Orient International Tower, Units 2201 & 2203, Kwai Chung, Hong Kong, HKG

Website

https://www.fongs.com

CHTC Fong's International Co Ltd is engaged in the manufacture and sale of dyeing and finishing machines, the manufacture and sale of stainless steel casting products, and the trading of stainless steel supplies. The group through its subsidiaries operates in three reportable segments which include the Manufacture and sale of dyeing and finishing machines; the Trading of stainless steel supplies; and Manufacture and sale of stainless steel casting products. Its business activity functions through various geographical regions which include China, Hong Kong, the Asia-Pacific, Europe, North America, South America, and others. It generates the majority of the company revenues from the dyeing and finishing machines segment.

Executives

China Hi-tech Holding Company Limited	2201 Interest of corporation controlled by you
Zhong Guo Ji Xie Gong Ye Ji Tuan You Xian Gong Si	2201 Interest of corporation controlled by you
Zhong Guo Heng Tian Ji Tuan You Xian Gong Si	2201 Interest of corporation controlled by you
East Asia International Trustees Limited	2201 Interest of corporation controlled by you
Black Jambhala Company Limited	2101 Beneficial owner
Fong Sou Lam	2307 Founder of a discretionary trust who can infl
Fong Kwok Leung Kevin	2305 Beneficiary of a trust

CHTC Fong's International Co Headlines

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