China Tianrui Group Cement Co (HKSE:01252) Predictability Rank

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What is China Tianrui Group Cement 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.

China Tianrui Group Cement 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

China Tianrui Group Cement Co Predictability Rank Related Terms

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China Tianrui Group Cement Co (HKSE:01252) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Building Materials » China Tianrui Group Cement Co Ltd (HKSE:01252) » Definitions » Predictability Rank

Traded in Other Exchanges

T18:Germany

Address

No. 63 Guangcheng East Road, Henan Province, Ruzhou, CHN, 467500

Website

http://www.trcement.com

China Tianrui Group Cement Co Ltd, along with its subsidiaries, is engaged in the excavation of limestone, the production, and sale of cement and clinker. The company is organized into two geographic segments: Central China and Northeastern China of which Central China contributes the vast majority of total revenue.

Executives

Li Fengluan	2201 Interest of corporation controlled by you
Li Liufa	2201 Interest of corporation controlled by you
Tianrui (international) Holding Company Limited	2201 Interest of corporation controlled by you
Tianrui Group Company Limited	2201 Interest of corporation controlled by you
Yu Kuo Company Limited	2101 Beneficial owner
Carosse Limited	2201 Interest of corporation controlled by you
Holy Eagle Company Limited	2201 Interest of corporation controlled by you
Yu Qi Company Limited	2201 Interest of corporation controlled by you
China Cinda Asset Management Co., Ltd.	2201 Interest of corporation controlled by you
China Huarong (macau) International Company Limited	2201 Interest of corporation controlled by you
Zhong Guo Hua Rong Zi Chan Guan Li Gu Fen You Xian Gong Si	2201 Interest of corporation controlled by you
Zhong Guo Jin Chu Kou Yin Xing	2106 Person having a security interest in shares
Wu Tong Shu Tou Zi Ping Tai You Xian Ze Ren Gong Si	2201 Interest of corporation controlled by you
Best Ego Limited	2106 Person having a security interest in shares
China Huarong International Holdings Ltd	2201 Interest of corporation controlled by you

China Tianrui Group Cement Co (HKSE:01252) Headlines

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