Based on Sinosoft Technology Group Limited’s (HKG:1297) earnings update in December 2018, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 22% in the upcoming year compared with the past 5-year average growth rate of 17%. Presently, with latest-twelve-month earnings at CN¥236m, we should see this growing to CN¥288m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How is Sinosoft Technology Group going to perform in the near future?
Longer term expectations from the 2 analysts covering 1297’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of 1297’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 23% based on the most recent earnings level of CN¥236m to the final forecast of CN¥473m by 2022. This leads to an EPS of CN¥0.43 in the final year of projections relative to the current EPS of CN¥0.19. In 2022, 1297’s profit margin will have expanded from 33% to 39%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Sinosoft Technology Group, I’ve compiled three pertinent factors you should further examine:
- 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 Sinosoft Technology Group 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 Sinosoft Technology Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sinosoft Technology Group? 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 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.