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The Importance of Understanding the financial statements Introduction: Investing in the stock market can be an exciting venture, but it also comes with inherent risks. As a beginner investor, it's crucial to arm yourself with the right knowledge and tools to make informed decisions. One of the fundamental aspects of analyzing a company's financial health is understanding its balance sheet and income statement. These two financial statements offer a glimpse into the company's financial position, performance, and overall stability. In this article, we will explore why understanding the balance sheet and income statement is essential before diving into the world of investing. Assessing Financial Health: The balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity. By understanding this statement, investors can assess the financial health and stability of a company. A strong balance sheet, with healthy assets and manageable liabilities, indicates a stable and well-managed company. On the other hand, a weak balance sheet with high debt levels may signal financial instability and higher risk for investors. Evaluating Profitability: The income statement offers insights into a company's revenue, expenses, and net income or profit. Analyzing the income statement helps investors understand how profitable the company is over a specific period. Consistent and growing profits are positive indicators of a company's ability to generate returns for shareholders. On the contrary, persistent losses or declining profits might raise concerns and influence investment decisions. Identifying Trends and Patterns: Regularly analyzing the balance sheet and income statement over multiple periods allows investors to identify trends and patterns in a company's financial performance. Patterns of consistent growth or steady improvements in key financial metrics can instill confidence in investors. Conversely, erratic or downward trends might serve as cautionary flags, prompting further investigation before making investment choices. Assessing Investment Risk: Understanding the balance sheet and income statement helps investors gauge the level of risk associated with investing in a particular company. A company with low levels of debt and stable revenue streams may offer a more secure investment compared to a company with high debt and fluctuating earnings. By understanding the financial statements, investors can better match their risk tolerance with suitable investment opportunities. Making Informed Investment Decisions: Investing without understanding the company's financial health is akin to taking a shot in the dark. A thorough analysis of the balance sheet and income statement empowers investors to make informed decisions based on objective data rather than emotions or speculative rumors. It provides a solid foundation for evaluating a company's potential for growth and long-term sustainability. Identifying Red Flags: Misinterpreting or overlooking crucial information in the financial statements can lead to costly mistakes. Understanding these statements helps investors spot red flags such as declining revenues, rising expenses, increasing debt levels, or unusual accounting practices. Recognizing these warning signs early can prevent investing in companies with underlying financial troubles. Conclusion: In conclusion, understanding the balance sheet and income statement is a fundamental skill that every investor should possess. These financial statements provide valuable insights into a company's financial health, profitability, and overall stability. By analyzing these statements, investors can make informed decisions, assess investment risks, and identify potential investment opportunities. Armed with this knowledge, beginner investors can navigate the complex world of the stock market with greater confidence and increase their chances of achieving their financial goals. Remember, successful investing is a journey of continuous learning and diligent analysis.
HKEX:3333Education
by thesharkke
1
BE GREEDY WHEN OTHERS ARE FEARFUL!!!! LIVE LONG EVERGRANDE...As traders or investors, we are supposed to make our own research, don't believe anything that everyone says. Evergrande was a hot discussion at the end of the quarter last year due to its failure to pay its debt. And as the second real estate developer in China, the negative effect was catastrophic throughout the entire world. The media never stop reporting the collapse of Evergrande and china's economic downfall. Most Chinese stocks were dumped hard even the Chinese blue-chip stocks couldn't avoid the effect. But based on my analysis on the chart, the buyers are back and starting buying the dip. (MACD& RSI look bullish ) But it's a very risky trade or investment, and there is no turning back!!! Invest only what you can afford to lose!!!! however, if it pulls off, greater rewards will come start with a small position first until the uptrend is made **Not financial advice**
HKEX:3333Long
by aryoTraderX
1
Is the Evergrande crisis over?The looming collapse of China Evergrande Group (HKG:3333), the world’s most indebted property developer, has roiled financial markets for months, threatening a contagion with far-reaching implications on China and the wider economy. In the early months since Evergrande’s financial crisis came to light, Beijing stayed mum on the issue, although the People’s Bank of China pumped billions of yuan in liquidity in what was seen as an attempt to quell liquidity concerns. Over this time, Evergrande’s stock price slipped 95%, from ~25HKD to ~1.5HKD, where it has stagnated for all of 2022. Evergrande’s massive debt pileup Evergrande, once China’s second-largest real estate developer, is drowning in more than $300 billion in debts to suppliers, contractors, creditors and investors. The company’s crisis partly stemmed from the introduction of Beijing’s "three red lines" rule in 2020 that made it harder for developers to seek bank financing to fund their projects. Another Lehman Brothers moment The large exposure of Chinese banks like Minsheng Bank, Ping An Bank and Everbright Bank to Evergrande prompted many financial watchers to predict that Evergrande's debt crisis could extend beyond China’s property and financial markets, warning that it could spill over to the global markets similar to the Lehman Brothers collapse that resulted in the 2008 global financial crisis. These fears intensified as Evergrande missed payments on a number of onshore bonds. The world’s three major credit rating agencies have already declared the developer to be in default after missing on its bond interest payments late last year. However, some analysts have played down concerns of Evergrande being the next “Lehman moment,” as they expect Beijing’s policymakers to prevent the crisis from being a systemic risk. Beijing steps in to limit fallout To minimize the potential impact of Evergrande’s looming collapse, Beijing has stepped up its efforts, but without a state-led bailout in sight. Back in October, the Chinese central bank said the risk of Evergrande’s liabilities spilling over to the country’s financial sector is "controllable,” while confirming reports that relevant government agencies and local governments have been carrying out risk disposal and resolution work to mitigate a potential contagion. In recent weeks, a number of news outlets reported that some banks in China have lowered mortgage rates, offered subsidies and allowed developers to access their funds on escrow in an attempt to revive the housing market. Beijing also started urging state-owned developers to acquire some projects of troubled builders to help ease the sector’s liquidity crunch. Fitch Ratings recently said Chinese developers are poised to see more small-scale mergers and acquisitions and the impact on buyers’ leverage are predicted to be small "as they select projects with promising returns." Light at the end of the tunnel It may take months or years for the property sector to recover as developers continue to struggle with a cash crunch that prevents them from meeting their debt obligations. However, with Beijing’s subtle approach in reviving the property market, Evergrande’s recovery may be drawing near. In February, new home prices in 100 cities in China rose for the first time in two months, further recovering from the slump in November when prices contracted for the first time since 2015. Policy reforms could encourage home-buying this year as the government included the healthy development of the real estate sector in its government work report unveiled by Premier Li Keqiang over the weekend. Li said authorities will seek to promote the commercial housing market and stabilize house prices this year. Foreign investors that purchase bonds and other securities from Chinese builders should closely monitor developments surrounding Beijing’s policies for the sector.
HKEX:3333
by BlackBull_Markets
China Evergrande Defaults! Now What?China Evergrande, the second-largest real estate developer in China, has been narrowly dodging default for months. The Company has more than US $300 billion in debt that, as it warned the market back in September, it believed would be difficult for it to service. (As an aside, it is believed that China Evergrande could have an additional US $150 billion in debt, off its official financial books). Put simply, the cash flow of the Company, severely dampened by the cooling Chinese housing market, is not enough for it to service interest payments to those from which it borrowed funds, typically in the form of interest-bearing corporate bonds. One such unlucky purchaser of China Evergrande corporate bonds, among others, are off-shore investors. Off-shore bondholders will likely be the least prioritised of the Company’s investors when receiving interest payments or reparations. China Evergrande defaults! Perhaps fortuitously, it was the failure by China Evergrande to make interest payments to this very group of investors that prompted Fitch Ratings to upgrade the Company’s status to “restricted default” on December 9. Interestingly, China Evergrande is the twelfth Chinese real estate firm to default on bonds in 2021, and by far the largest to do so. Now what? Other rating agencies, such as Moody’s and S&P Global, have not been so quick to upgrade their status of China Evergrande. However, S&P Global has noted that China Evergrande’s default is “inevitable”. China Evergrande themselves seem to be ignoring public comment on its failure to meet its obligation, nor has it ceased operations or begun any formal paperwork to address its potential bankruptcy. China Evergrande is currently under restructuring while attempting to continue operations as usual. The restructuring includes renegotiating its liabilities and offloading non-construction arms of the Company at bargain prices such as its property management business, as well as stakes in a major Chinese bank and (strangely enough) a streaming services. Pressure is being applied to the Company’s leaders to speed up its restructuring since the change in its Fitch rating. According to Bloomberg, the China Evergrande restructure is being heavily monitored, if not outright controlled by Chinese Authorities in Beijing and the Company’s home province of Guangdong. Right now, the official line from the Central Bank of China is that the China Evergrande crisis is being handled as per the “principles of marketization and rule of law,”. If more rating agencies follow Fitch Rating in the coming weeks, China Evergrande could slip into something a little more serious than restricted default and the above quote may become a little truer, with Chinese authorities being hamstrung in their ability to interfere with a meltdown.
HKEX:3333
by BlackBull_Markets
Evergrande's SelfdestructionEvergrande shares, symbol 3333, have been getting demolished as of late. On December 6th it broke past its all time lows of 1.88 HKD. This puts Evergrand's stock over 94% down from it's ATH of 32.39 HKD now at 1.77 HKD. The stock is no longer in free fall however, that may not last for long. On December 9th the real estate developer had defaulted on its debt for the first time. Despite the striking resemblance to the fall of Lehman Brothers, Evergrande has made strong efforts to distance itself from being perceived as fundamentally the same thing. Narratives around possible contagion to global markets have fuelled uncertainties and a possible run to risk off. Crypto could suffer due to offshore creditors to Evergrande such as Black Rock who also have exposure to BTC and ETH possibly selling to rebalance or cover losses. Please check out my previous analysis on BTC/USD where I predicted a retrace to $50k with support @ $47k. If you like my content, feedback, likes and coins are encouraged and appreciated! Thank you.
HKEX:3333Short
by Kumo9
EverGrande (3333/EGRNF) - a possible Christmas present!Evergrande is mostly being discussed only in a relation to the fall of Alibaba, or the rise of JD.com or changes in the Chinese economy. However, somehow it doesn't ring the bell that when such a Chinese giant falls, and eventually doesn't seem to go bankrupt, that it's a possible golden mine for the future. Currently EGRNF (which is a US equivalent of 3333) is being traded at 0.33$/st., while in the old good times it was reaching in a peak 3.5+$/st. (or 2.73 HKD vs 30 HKD) - meaning x10 times the value of current price. In other words, if Evergrande will eventually will not go bankrupt, it will recover. Especially considering the policies of the Chinese government which is very busy with maximizing own sustainablity and financial growth. Evengrande in a current state seems as a golden mine, which is somehow currently overlooked by the crowds. There is a challenge though. which I came across, seeing that some European banks are not willing to allow trading this stock. It is visible in the trading system as active, but there is no way to purchase it. Quite frustrating, not being able to purchase this stock on such a great opportunity. Current trend: It seems quite far at the moment from the 4.50 HKD level, therefore it may yet return to the 2.50 HKD. The moment it will confidently pass 4.50 HKD, it will most likely be a sign of coming back from dead, and from that moment it may pick up quite rapidly.
HKEX:3333
by inducto