Chongqing Rural Commercial Bank Co., Ltd. (HKG:3618): What Are The Future Prospects?
Since Chongqing Rural Commercial Bank Co., Ltd. (HKG:3618) released its earnings in June 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 6.3% next year compared with the higher past 5-year average growth rate of 9.1%. Currently with trailing-twelve-month earnings of CN¥8.9b, we can expect this to reach CN¥9.5b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Chongqing Rural Commercial Bank in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
View our latest analysis for Chongqing Rural Commercial Bank
What can we expect from Chongqing Rural Commercial Bank in the longer term?
The view from 12 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of CN¥8.9b and the final forecast of CN¥10b by 2022, the annual rate of growth for 3618’s earnings is 6.6%. EPS reaches CN¥1.05 in the final year of forecast compared to the current CN¥0.94 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 44% to 34% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Chongqing Rural Commercial Bank, there are three essential 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.
Valuation: What is Chongqing Rural Commercial Bank 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 Chongqing Rural Commercial Bank is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Chongqing Rural Commercial Bank? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
