5 Companies with Net Earnings CAGR above 50% for the Past 3 Years

The Net Earnings Compound Annual Growth Rate (“CAGR”) measures the rate of growth in each company's net earnings.

It indicates the growth in earnings across a specific period. The formula to derive the Net Earnings CAGR is as follows:

(Current year's value / Value X years ago) ^ (1/X) - 1

The growth in net earnings is an important aspect because it helps in determining whether companies have been consistent in growing their net earnings over the long run.

With that said, 5 such companies which have managed to achieve this strong growth in the past 3 years include:

• Azeus Systems Holdings Limited (SGX: BBW)
• Engro Corporation Limited (SGX: S44)
• LHN Limited (SGX: 41O)
• Union Gas Holdings Limited (SGX: 1F2)
• Vicplas International Limited (SGX: 569)

Note: CAGR calculations are based on the Full Year financial results announcements over the past few years.

1) Azeus Systems Holdings Limited (SGX: BBW)

A leading provider of IT products and services, Azeus Systems Holdings Limited (“Azeus”) was listed on the Main Board of the SGX in October 2004, with offices in Hong Kong, Singapore, the United Kingdom, the Philippines and China.

The Group’s flagship product, Azeus Convene, is a leading paperless meeting solution used by directors and executives in various industries, across more than 100 countries. The Group has also introduced a virtual AGM solution, AGM@Convene, in response to the shifting trend towards e-AGMs as a result of the COVID-19 restrictions.

For the past 3 financial years, Azeus’s Net Earning CAGR stands at more than 130%. Despite the fluctuation in its revenue (Blue Bar), higher net earnings margin (Blue Line) have propelled the growth in its Net Earnings across the years.

Azeus’s share price last traded at S$7.29, with a market capitalization of S$218.70 million.

2) Engro Corporation Limited (SGX: S44)

Engro Corporation Limited (“Engro”) is engaged in the manufacturing and sale of cement and building materials, and specialty polymers. The Cement and building materials segment are engaged in the manufacturing and sale of cement, ready-mix concrete and building materials. The Specialty polymer segment is engaged in the manufacturing and sale of thermosetting synthetic resin and plastic materials.

Despite the declining revenue (Blue Bar) for the past 3 financial years, Engro still managed to record a net earnings CAGR of more than 80%. This phenomenon was assisted by the higher earnings achieved by its associate's company and a higher net earnings margin (Blue Line) recorded across the years.

Engro’s share price last traded at S$1.28, with a market capitalization of S$151.94 million.

3) LHN Limited (SGX: 41O)

LHN Limited (“LHN”) is a real estate management services group, with the ability to generate value for its landlords and tenants through its expertise in space optimisation, and logistics service provider headquartered in Singapore.

For the past 3 financial years, LHN’s revenue (Blue Bar) was pretty flat but net earnings CAGR came in at more than 70% due to the higher net earnings margin (Blue Line).

LHN’s share price last traded at S$0.315, with a market capitalization of S$128.81 million.

4) Union Gas Holdings Limited (SGX: 1F2)

Listed on the Catalist board of the Singapore Exchange Securities Trading Limited on 21st July 2017, Union Gas Holdings Limited (“Union Gas”) is an established provider of fuel products in Singapore with over 40 years of operating track record. Its three key business comprise of Retail Liquefied Petroleum Gas (“LPG”), Compressed Natural Gas (“CNG”), and Diesel.

For the past 3 financial years, Union Gas’s net earnings CAGR stood at more than 58%. Apart from the growing revenue (Blue Bar), the growth in its net earnings margin (Blue Line) also helped Union Gas to achieve high net earnings CAGR figures across the years.

Union Gas’s share price last traded at S$0.73, with a market capitalization of S$231.86 million.

5) Vicplas International Limited (SGX: 569)

Vicplas International Limited (“Vicplas”) is a Singapore-based company, which is engaged in two core businesses, medical device contract manufacturing and manufacturing of uPVC piping systems. The Company designs, develops and manufactures sterile and non-sterile medical devices and manufactures and distributes piping systems for diverse industries, including waste and potable water systems for residential homes, schools, commercial and industrial buildings.

For the past 3 financial years, Vicplas’s net earnings CAGR stood at more than 50%. Apart from the growing revenue (Blue Bar), the jump in its net earnings margin (Blue Line) also helped Vicplas to secure a high net earnings CAGR across the years.

Vicplas’s share price last traded at S$0.23, with a market capitalization of S$117.54 million.

Conclusion

In summary, a company’s net income may fluctuate on a year-to-year basis because of the product mix and circumstances that impact the earnings margin.

On that note, investors can utilize the compounded annual growth rate (CAGR) of a company's net earnings over a period of time to better gauge how the firm is performing.

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