Xinyi Solar Holdings Limited (HKG:968): Will The Growth Last?

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The latest earnings announcement Xinyi Solar Holdings Limited (HKG:968) released in December 2018 suggested that the company endured a substantial headwind with earnings deteriorating by -20%. Below, I’ve laid out key numbers on how market analysts view Xinyi Solar Holdings’s earnings growth outlook over the next couple of years and whether the future looks brighter. 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.

Check out our latest analysis for Xinyi Solar Holdings

Analysts’ outlook for next year seems positive, with earnings increasing by a robust 33%. This growth seems to continue into the following year with rates reaching double digit 58% compared to today’s earnings, and finally hitting HK$3.5b by 2022.

SEHK:968 Past and Future Earnings, June 5th 2019
SEHK:968 Past and Future Earnings, June 5th 2019

Even though it’s useful to understand the rate of growth each year relative to today’s value, it may be more valuable analyzing the rate at which the company is rising or falling on average every year. The benefit of this method is that we can get a better picture of the direction of Xinyi Solar Holdings’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 20%. This means, we can anticipate Xinyi Solar Holdings will grow its earnings by 20% every year for the next couple of years.

Next Steps:

For Xinyi Solar Holdings, there are 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 968 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 968 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 968? 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.