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Global New Material International Holdings (HKSE:06616) Predictability Rank


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What is Global New Material International Holdings Predictability Rank?

Not Rated

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.

Global New Material International 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

Global New Material International Holdings Predictability Rank Related Terms

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Global New Material International Holdings (HKSE:06616) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Basic Materials » Chemicals » Global New Material International Holdings Ltd (HKSE:06616) » Definitions » Predictability Rank
Comparable Companies
HKSE:00746 HKSE:01702 HKSE:02198 HKSE:00609 HKSE:00827 HKSE:09933 HKSE:00433 HKSE:08139 HKSE:00660 HKSE:00189 SAU:2010 TSE:4063 XTER:BAS DOW XKRX:051910 SZSE:002493 SHSE:600989 CE XKLS:5183 XKRX:086520
Traded in Other Exchanges
N/A
Address
No. 380, Feilu Road, Pearlescent Industrial Park, Guangxi Zhuang Autonomous Region, Luzhai Town, Luzhai County, Liuzhou, CHN, 545600
Website
http://www.chesir.net
Global New Material International Holdings Ltd is engaged in the production, research and development, and sales of pearlescent materials and synthetic mica. The materials are used in diverse applications and industries, including industrial coatings, plastics, textiles and leather, cosmetics, and automotive coatings. The company generates the majority of its revenue from the sale of pearlescent pigment products.
Executives
Wang Huan 2202 Interest of your spouse
Su Ertian 2201 Interest of corporation controlled by you
Guang Xi Tou Zi Ji Tuan You Xian Gong Si 2201 Interest of corporation controlled by you
Guang Xi Gui Dong Dian Li Gu Fen You Xian Gong Si 2101 Beneficial owner
Guang Xi Guang Tou Zheng Run Fa Zhan Ji Tuan You Xian Gong Si 2201 Interest of corporation controlled by you
Guang Xi Lu Hai Xin Tong Dao Gu Quan Tou Zi Guan Li You Xian Gong Si 2201 Interest of corporation controlled by you
Guang Xi Lu Hai Xin Tong Dao Gu Quan Tou Zi Guan Li Zhong Xin You Xian He Huo 2201 Interest of corporation controlled by you
Guang Xi Lu Hai Xin Tong Dao Gu Quan Tou Zi Ji Jin He Huo Qi Ye You Xian He Huo 2201 Interest of corporation controlled by you
Guang Xi Jin Rong Tou Zi Ji Tuan You Xian Gong Si 2201 Interest of corporation controlled by you
Guang Tou Zi Ben Guan Li Ji Tuan You Xian Gong Si 2201 Interest of corporation controlled by you
Guo Jia Kai Fa Yin Hang 2201 Interest of corporation controlled by you
You Ou Bi Tou Zi Guan Li Shang Hai You Xian Gong Si 2201 Interest of corporation controlled by you
Zhong Guo Tou Zi You Xian Ze Ren Gong Si 2201 Interest of corporation controlled by you
Guo Kai Jin Rong You Xian Ze Ren Gong Si 2201 Interest of corporation controlled by you
Zhong Yang Hui Jin Tou Zi You Xian Ze Ren Gong Si 2201 Interest of corporation controlled by you

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