Canvest Environmental Protection Group Company Limited (HKG:1381): Immense Growth Potential?

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Canvest Environmental Protection Group Company Limited’s (HKG:1381) announced its latest earnings update in December 2018, which confirmed that the business experienced a strong tailwind, eventuating to a double-digit earnings growth of 34%. Below, I’ve laid out key numbers on how market analysts view Canvest Environmental Protection Group’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Canvest Environmental Protection Group

Market analysts’ consensus outlook for the coming year seems positive, with earnings expanding by a robust 19%. This growth seems to continue into the following year with rates arriving at double digit 38% compared to today’s earnings, and finally hitting HK$1.2b by 2022.

SEHK:1381 Past and Future Earnings, June 3rd 2019
SEHK:1381 Past and Future Earnings, June 3rd 2019

While it is helpful to be aware of the growth rate each year relative to today’s value, it may be more insightful to estimate the rate at which the business is rising or falling every year, on average. The pro of this technique is that we can get a better picture of the direction of Canvest Environmental Protection Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 15%. This means that, we can assume Canvest Environmental Protection Group will grow its earnings by 15% every year for the next few years.

Next Steps:

For Canvest Environmental Protection Group, I’ve put together three key aspects 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 1381 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 1381 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1381? 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.