What Should Investors Know About BOC Hong Kong (Holdings) Limited’s (HKG:2388) Future?

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In December 2018, BOC Hong Kong (Holdings) Limited (HKG:2388) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 5.5% next year against the higher past 5-year average growth rate of 7.8%. By 2020, we can expect BOC Hong Kong (Holdings)’s bottom line to reach HK$34b, a jump from the current trailing-twelve-month of HK$32b. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for BOC Hong Kong (Holdings) in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for BOC Hong Kong (Holdings)

How will BOC Hong Kong (Holdings) perform in the near future?

Over the next three years, it seems the consensus view of the 10 analysts covering 2388 is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of 2388’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.

SEHK:2388 Past and Future Earnings, May 13th 2019
SEHK:2388 Past and Future Earnings, May 13th 2019

This results in an annual growth rate of 6.7% based on the most recent earnings level of HK$32b to the final forecast of HK$39b by 2022. EPS reaches HK$3.65 in the final year of forecast compared to the current HK$3.03 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 60% to 56% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For BOC Hong Kong (Holdings), I’ve put together three pertinent aspects you should further examine:

  1. 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.
  2. Valuation: What is BOC Hong Kong (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 BOC Hong Kong (Holdings) is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BOC Hong Kong (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!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.