Hongchang International Co (Hongchang International Co) Predictability Rank

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What is Hongchang International Co Predictability Rank?

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.

Hongchang International Co 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

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	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 Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-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

Hongchang International Co Predictability Rank Related Terms

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Hongchang International Co (Hongchang International Co) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Hongchang International Co Ltd (OTCPK:HCIL) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

N/A

Address

BLOCK 19, HONGCHANG FOOD CO, YUANHONG INVESTMENT ZONE, CHENGTOU TOWN, FUJIAN PROVINCE, FUQING, CHN, 350300

Website

http://www.hcfrozen.com

Hongchang International Co Ltd is a company mainly exports frozen fruits and vegetables, aquatic products. we have our own factory and agricultural base to produce fresh fruits, and the contract factory to produce frozen fruits and vegetables. Their products are mainly supplied to the world supermarkets, as well as wholesale in the United States, Southeast Asia, the Middle East, Europe and other countries.

Executives

Ban Siong Ang	director, 10 percent owner	1986, PERMATANG BERANGAN,, TASEK GELUGOR, PENANG N8 13300
Xingjia Gao	director	ROOM 1007, XIANGYUN BUILDING, NO.1400, BAIYUN AV., NORTH GUANGZHOU F4 510440
Zengqiang Lin	director, 10 percent owner, officer: CEO, President	1008, BLOCK B, RONGSHANG BUILDING, FUQING CITY F4 350309
Zhenzhu Lin	director, 10 percent owner	1008, BLOCK B, RONGSHANG BUILDING, FUQING CITY F4 350309
Hung Seng Tan	director	38, LORONG SERI PETALING 1/1, TAMAN SERI PETALING, KULIM,KEDAM N8 09000
Daniel C Master	other: Former Pres, Direct, 10% owner	P O BOX 66, LA JOLLA CA 92038
Kwee Huwa Tan	director	NO 8-1F, JALAN GAMALAN INDAH 1, TAMAN GAMELAN INDAH, SINGAI BAKAP N8 14200
Wei Li	officer: Chief Financial Officer	4TH FLOOR, NO. 10 BLDG, XINGLIN BAY, BUSINESS OPERATION CENTER, JIMEI DISTR., XIAMEN F4 00000
Derald M Miller	director	230 WEST 400 SOUTH, 1ST FLOOR, SALT LAKE CITY UT 84101
K Lance Bell	director, officer: CEO, President	230 WEST 400 SOUTH 1ST FLOOR, SALT LAKE CITY UT 84101
Tanner J Purser	officer: Secretary	230 WEST 400 SOUTH, 1ST FLOOR, SALT LAKE CITY UT 84101
James C Roundy	director, officer: vice president	230 WEST 400 SOUTH 1ST FLOOR, SALK LAKE CITY UT 84101
Robert Brett Bell	officer: Secretary	180 SOUTH 300 WEST, SUITE 400, SALT LAKE CITY UT 84101
Allan E Oepping	other: Former director	180 SOUTH 300 WEST, SUITE 400, SALT LAKE CITY UT 84101
Benjamin A Black	other: Former director	180 SOUTH 300 WEST, SUITE 400, SALT LAKE CITY UT 84101

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