CoAsia (KOSDAQ:045970) adds ₩7.1b to market cap in the past 7 days, though investors from three years ago are still down 66%

Simply Wall St · 04/15 22:19

CoAsia Corporation (KOSDAQ:045970) shareholders should be happy to see the share price up 10% in the last week. But that doesn't change the fact that the returns over the last three years have been disappointing. Tragically, the share price declined 66% in that time. Some might say the recent bounce is to be expected after such a bad drop. Perhaps the company has turned over a new leaf.

On a more encouraging note the company has added ₩7.1b to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

We've discovered 2 warning signs about CoAsia. View them for free.

CoAsia wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years CoAsia saw its revenue shrink by 6.2% per year. That is not a good result. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 18% per year. Having said that, if growth is coming in the future, now may be the low ebb for the company. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
KOSDAQ:A045970 Earnings and Revenue Growth April 15th 2025

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While the broader market lost about 8.1% in the twelve months, CoAsia shareholders did even worse, losing 54%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 9% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with CoAsia (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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