In December 2018, Beijing Tong Ren Tang Chinese Medicine Company Limited (HKG:3613) announced its latest earnings update, which indicated that the business gained from a robust tailwind, eventuating to a double-digit earnings growth of 19%. Below, I’ve laid out key growth figures on how market analysts view Beijing Tong Ren Tang Chinese Medicine’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for the upcoming year seems positive, with earnings increasing by a robust 16%. This growth seems to continue into the following year with rates arriving at double digit 34% compared to today’s earnings, and finally hitting HK$885m by 2022.
Even though it is helpful to understand the growth rate each year relative to today’s figure, it may be more beneficial gauging the rate at which the earnings are moving on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Beijing Tong Ren Tang Chinese Medicine’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14%. This means, we can anticipate Beijing Tong Ren Tang Chinese Medicine will grow its earnings by 14% every year for the next couple of years.
For Beijing Tong Ren Tang Chinese Medicine, I’ve compiled three fundamental factors you should look at:
- 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 3613 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 3613 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3613? 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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