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China Overseas Land & Investment Limited (HKG:688): Immense Growth Potential?

Simply Wall St

Based on China Overseas Land & Investment Limited's (HKG:688) earnings update in December 2018, analyst forecasts seem fairly subdued, with profits predicted to rise by 6.0% next year relative to the higher past 5-year average growth rate of 13%. With trailing-twelve-month net income at current levels of HK$45b, we should see this rise to HK$48b in 2020. 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.

See our latest analysis for China Overseas Land & Investment

How is China Overseas Land & Investment going to perform in the near future?

The longer term expectations from the 21 analysts of 688 is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of 688's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

SEHK:688 Past and Future Earnings, August 21st 2019

This results in an annual growth rate of 12% based on the most recent earnings level of HK$45b to the final forecast of HK$65b by 2022. EPS reaches HK$5.89 in the final year of forecast compared to the current HK$4.1 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 26% to 21% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For China Overseas Land & Investment, there are three essential aspects you should further examine:

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