What Should We Expect From China Traditional Chinese Medicine Holdings Co. Limited’s (HKG:570) Earnings Over The Next Year?

In June 2018, China Traditional Chinese Medicine Holdings Co. Limited (HKG:570) announced its earnings update. Overall, analysts seem cautiously optimistic, as a 24% increase in profits is expected in the upcoming year, though this is noticeably lower than the previous 5-year average earnings growth of 36%. Presently, with latest-twelve-month earnings at CN¥1.2b, 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 China Traditional Chinese Medicine Holdings in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for China Traditional Chinese Medicine Holdings

What can we expect from China Traditional Chinese Medicine Holdings in the longer term?

The 18 analysts covering 570 view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for 570, 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:570 Future Profit January 7th 19
SEHK:570 Future Profit January 7th 19

By 2022, 570’s earnings should reach CN¥2.3b, from current levels of CN¥1.2b, resulting in an annual growth rate of 20%. This leads to an EPS of CN¥0.45 in the final year of projections relative to the current EPS of CN¥0.26. In 2022, 570’s profit margin will have expanded from 14% to 16%.

Next Steps:

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 further research:

  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 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.
  3. 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!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.