Will Lonking Holdings Limited’s (HKG:3339) Earnings Grow Over The Next Year?

On 31 December 2018, Lonking Holdings Limited (HKG:3339) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, as a 22% increase in profits is expected in the upcoming year, though this is noticeably lower than the previous 5-year average earnings growth of 31%. Presently, with latest-twelve-month earnings at CN¥1.1b, we should see this growing to CN¥1.4b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Lonking Holdings in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Lonking Holdings

How will Lonking Holdings perform in the near future?

The longer term view from the 12 analysts covering 3339 is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for 3339, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

SEHK:3339 Past and Future Earnings, April 24th 2019
SEHK:3339 Past and Future Earnings, April 24th 2019

By 2022, 3339’s earnings should reach CN¥1.5b, from current levels of CN¥1.1b, resulting in an annual growth rate of 8.6%. EPS reaches CN¥0.36 in the final year of forecast compared to the current CN¥0.27 EPS today. With a current profit margin of 9.6%, this movement will result in a margin of 11% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Lonking Holdings, I’ve put together three relevant factors 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 Lonking 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 Lonking Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lonking 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.