Based on China Traditional Chinese Medicine Holdings Co. Limited’s (HKG:570) earnings update in December 2018, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 19% next year relative to the higher past 5-year average growth rate of 33%. By 2020, we can expect China Traditional Chinese Medicine Holdings’s bottom line to reach CN¥1.7b, a jump from the current trailing-twelve-month of CN¥1.4b. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is China Traditional Chinese Medicine Holdings going to perform in the near future?
The 15 analysts covering 570 view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, 570’s earnings should reach CN¥2.5b, from current levels of CN¥1.4b, resulting in an annual growth rate of 16%. EPS reaches CN¥0.50 in the final year of forecast compared to the current CN¥0.30 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 13% to 13% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Traditional Chinese Medicine Holdings, there are three key aspects 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 China Traditional Chinese Medicine 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 Traditional Chinese Medicine Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Traditional Chinese Medicine 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 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.