China Resources Land Limited’s (HKG:1109) most recent earnings update in December 2018 revealed that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 26%. Below, I’ve laid out key numbers on how market analysts perceive China Resources Land’s earnings growth outlook over the next couple of 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’ expectations for the upcoming year seems rather subdued, with earnings expanding by a single digit 4.8%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 22% compared to today’s earnings, and finally hitting CN¥34b by 2022.
Although it’s useful to understand the rate of growth year by year relative to today’s value, it may be more insightful to determine the rate at which the company is rising or falling every year, on average. The advantage of this approach is that we can get a better picture of the direction of China Resources Land’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 12%. This means that, we can assume China Resources Land will grow its earnings by 12% every year for the next few years.
For China Resources Land, I’ve put together three fundamental factors you should further research:
- 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 1109 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 1109 is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1109? 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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If you spot an error that warrants correction, please contact the editor at email@example.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.