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China Harmony New Energy Auto Holding Limited's (HKG:3836) latest earnings announcement in December 2018 indicated that the company endured a substantial headwind with earnings deteriorating by -32%. Today I want to provide a brief commentary on how market analysts perceive China Harmony New Energy Auto Holding's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' expectations for next year seems pessimistic, with earnings decreasing by a double-digit -26%. Beyond this, earnings are predicted to continue to be below today's level, with a decline of -17% in 2021, eventually reaching CN¥570m in 2022.
Although it’s useful to understand the growth each year relative to today’s figure, it may be more beneficial estimating the rate at which the earnings are growing every year, on average. The pro of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of China Harmony New Energy Auto Holding's earnings trajectory over time, 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 0.9%. This means, we can presume China Harmony New Energy Auto Holding will grow its earnings by 0.9% every year for the next few years.
For China Harmony New Energy Auto Holding, I've compiled three important factors you should look at:
- 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.
- Future Earnings: How does 3836'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.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3836? 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 email@example.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.