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What Do Analysts Think About The Future Of China Gas Holdings Limited's (HKG:384)?

Simply Wall St

The most recent earnings update China Gas Holdings Limited's (HKG:384) released in July 2019 revealed that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 35%. Below, I've laid out key numbers on how market analysts view China Gas Holdings's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. 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.

View our latest analysis for China Gas Holdings

Market analysts' prospects for this coming year seems optimistic, with earnings growing by a robust 18%. This growth seems to continue into the following year with rates reaching double digit 38% compared to today’s earnings, and finally hitting HK$13b by 2022.

SEHK:384 Past and Future Earnings, September 4th 2019

Although it is informative understanding the growth rate year by year relative to today’s level, it may be more valuable to estimate the rate at which the company is growing every year, on average. The advantage of this approach is that we can get a bigger picture of the direction of China Gas Holdings'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 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 13%. This means that, we can presume China Gas Holdings will grow its earnings by 13% every year for the next few years.

Next Steps:

For China Gas Holdings, there are three essential factors you should look at:

  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 384 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 384 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 384? 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.