FIT Hon Teng Limited (HKG:6088): Poised For Long-Term Success?

The most recent earnings update FIT Hon Teng Limited’s (HKG:6088) released in December 2017 showed that the business experienced a small tailwind, leading to a single-digit earnings growth of 7.08%. Today I want to provide a brief commentary on how market analysts view FIT Hon Teng’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. See our latest analysis for FIT Hon Teng

Market analysts’ prospects for this coming year seems positive, with earnings increasing by a robust 15.93%. This growth seems to continue into the following year with rates arriving at double digit 39.79% compared to today’s earnings, and finally hitting HK$277.43m by 2021.

SEHK:6088 Future Profit June 12th 18
SEHK:6088 Future Profit June 12th 18

Even though it’s informative knowing the growth rate each year relative to today’s figure, it may be more valuable to determine the rate at which the business is rising or falling on average every year. The pro of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of FIT Hon Teng’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put 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 14.78%. This means that, we can expect FIT Hon Teng will grow its earnings by 14.78% every year for the next couple of years.

Next Steps:

For FIT Hon Teng, I’ve compiled three relevant 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 6088 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 6088 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 6088? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!