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BYD Electronic (International) Company Limited (HKG:285): Is It A Smart Long Term Opportunity?

Simply Wall St

In December 2018, BYD Electronic (International) Company Limited (HKG:285) announced its earnings update. Overall, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 6.5% next year against the higher past 5-year average growth rate of 28%. By 2020, we can expect BYD Electronic (International)’s bottom line to reach CN¥2.3b, a jump from the current trailing-twelve-month of CN¥2.2b. 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.

Check out our latest analysis for BYD Electronic (International)

How is BYD Electronic (International) going to perform in the near future?

The longer term view from the 13 analysts covering 285 is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 285's earnings growth over these next few years.

SEHK:285 Past and Future Earnings, August 9th 2019

This results in an annual growth rate of 9.7% based on the most recent earnings level of CN¥2.2b to the final forecast of CN¥2.9b by 2022. This leads to an EPS of CN¥1.25 in the final year of projections relative to the current EPS of CN¥0.97. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 5.3% to 5.0% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For BYD Electronic (International), there are three important factors you should look at:

  1. Valuation: What is BYD Electronic (International) 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 BYD Electronic (International) is currently mispriced by the market.
  2. Future Earnings: How does BYD Electronic (International)'s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BYD Electronic (International)? 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.