Agritrade Resources Limited (HKG:1131): Immense Growth Potential?
In March 2018, Agritrade Resources Limited (HKG:1131) released its earnings update. Generally, analysts seem fairly confident, with earnings expected to grow by 20.0% in the upcoming year, though this is relatively lower than the past 5-year average earnings growth of 28.9%. Presently, with latest-twelve-month earnings at HK$424.5m, we should see this growing to HK$509.5m by 2019. Below is a brief commentary around Agritrade Resources’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
See our latest analysis for Agritrade Resources
How is Agritrade Resources going to perform in the near future?
The 2 analysts covering 1131 view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for 1131, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of HK$424.5m and the final forecast of HK$748.6m by 2021, the annual rate of growth for 1131’s earnings is 18.3%. EPS reaches HK$0.11 in the final year of forecast compared to the current HK$0.067 EPS today. Growth in earnings appears to be a result of revenue expansion of 19.4% exceeeding cost growth over time. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 19.0% to 18.9% by the end of 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Agritrade Resources, I’ve put together three fundamental aspects 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 Agritrade Resources 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 Agritrade Resources is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Agritrade Resources? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
