After China Resources Power Holdings Company Limited’s (HKG:836) earnings announcement in December 2018, analyst consensus outlook appear vastly optimistic, as a 89% rise in profits is expected in the upcoming year, against the past 5-year average growth rate of -20%. With trailing-twelve-month net income at current levels of HK$4.0b, we should see this rise to HK$7.5b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from China Resources Power Holdings in the longer term?
Over the next three years, it seems the consensus view of the 12 analysts covering 836 is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of 836’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 26% based on the most recent earnings level of HK$4.0b to the final forecast of HK$9.8b by 2022. This leads to an EPS of HK$1.97 in the final year of projections relative to the current EPS of HK$0.83. In 2022, 836’s profit margin will have expanded from 5.1% to 12%.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Resources Power Holdings, I’ve compiled three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is China Resources Power Holdings worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether China Resources Power Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Resources Power Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.