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Tian Chang Group Holdings (HKSE:02182) Predictability Rank


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What is Tian Chang Group Holdings Predictability Rank?

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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.

Tian Chang Group Holdings 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

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%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 Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-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

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

Tian Chang Group Holdings Predictability Rank Related Terms

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Tian Chang Group Holdings Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Industrials » Conglomerates » Tian Chang Group Holdings Ltd (HKSE:02182) » Definitions » Predictability Rank
Comparable Companies
HKSE:01063 HKSE:01094 HKSE:00118 HKSE:00764 HKSE:00138 HKSE:00862 HKSE:00925 HKSE:01222 HKSE:00500 HKSE:08269 ADX:IHC HON TSE:6501 TSE:8058 MMM TSE:8001 TSE:8031 HKSE:00267 TSE:8002 ADX:ALPHADHABI
Traded in Other Exchanges
N/A
Address
55 Hoi Yuen Road, Workshop Unit 6, 13th Floor, Block B, Hoi Luen Industrial Centre, Kwun Tong, Hong Kong, HKG
Website
https://www.hktcgroup.com
Tian Chang Group Holdings Ltd is principally engaged in the manufacturing and sales of electronic cigarette products and providing integrated plastic solutions in Hong Kong and the PRC. It operates in the segments of the Integrated plastic solutions segment, the Electronic cigarette products segment, and the Medical consumable products segment. The E-cigarette products segment involves the manufacture and sales of e-cigarette products, whereas the Integrated plastic solutions segment consists of the manufacture and sales of moulds and plastic products. It derives key revenue from the PRC.
Executives
Chan Tsan Lam 2101 Beneficial owner
Fung Suk Yee May 2202 Interest of your spouse
Cheng Chak 2101 Beneficial owner
Oceanic Green Group Limited
New Strength Ventures Limited 2101 Beneficial owner
Gold Alliance Ventures Limited 2101 Beneficial owner
New Straits Ventures Limited 2101 Beneficial owner

Tian Chang Group Holdings Headlines

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