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Today both companies benefit from brand recognition in China, which will help them grow. But, for investors interested in this market, which company is the better buy?
In this article, we will look at both companies to help you make your decision.
Which company grew faster?
To begin, let’s look at both companies’ track records to help us predict their long-term performance. We will also want to look at which company has grown faster over the last decade.
Let’s start with Hengan.
From 2009 to 2018, Hengan grew its revenue from RMB 9.7 billion to RMB 20.5 billion. Similarly, net profit increased from RMB 1.9 billion to RMB 3.8 billion. Both were up by over 100% during that period.
Comparatively, Vinda grew its revenue from HK$ 2.8 billion to HK$ 14.9 billion, with the company’s net profit increasing from HK$ 0.40 billion to HK$ 0.65 billion. The former grew 432%, while the latter was up by 63% during the decade.
Overall, both companies performed well over the past decade.
At this point, there is no clear winner. Vinda grew its revenue at a much faster pace, but net profit did not keep up. Hengan, on the other hand, grew net profit and revenue at similar rates.
Which company paid better dividends?
Another important aspect for investors to consider is the dividend track record for both companies. When we evaluate dividends, we should be looking for stability and growth over the long term.
Again, let’s start with Hengan. In the last decade, it grew its dividend per share (DPS) from RMB 0.45 in 2009 to RMB 2.20 in 2018. In percentage terms, DPS was up by 389%.
Vinda increased its DPS from HK$0.12 to HK$ 0.20 in the same period, up by 67% during the decade.
Overall, both companies did well in paying stable and growing dividends over an extended period. Still, Hengan came in ahead with its higher dividend growth rate.
In sum, both companies performed well over the last decade, growing their profits and overall business. Both companies have also shared those profits with investors in the form of increasing dividends.
That considered, while it is hard to state a clear winner in this tight race, Hengan did come out slightly ahead since it grew both net profit and its dividend at a higher rate.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Lawrence Nga doesn’t own shares in any companies mentioned.