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Based on China Life Insurance Company Limited’s (HKG:2628) earnings update in September 2018, analyst consensus outlook appear cautiously optimistic, as a 27% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -0.1%. With trailing-twelve-month net income at current levels of CN¥32b, we should see this rise to CN¥40b in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for China Life Insurance in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 13 analysts of 2628 is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for 2628, 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.
By 2022, 2628’s earnings should reach CN¥60b, from current levels of CN¥32b, resulting in an annual growth rate of 26%. This leads to an EPS of CN¥1.46 in the final year of projections relative to the current EPS of CN¥1.13. In 2022, 2628’s profit margin will have expanded from 4.9% to 7.2%.
Future outlook is only one aspect when you’re building an investment case for a stock. For China Life Insurance, I’ve put together three fundamental factors 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 China Life Insurance 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 China Life Insurance is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Life Insurance? 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. On rare occasion, data errors may occur. Thank you for reading.