In December 2018, China Agri-Industries Holdings Limited (HKG:606) announced its earnings update. Overall, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 19% in the upcoming year against the higher past 5-year average growth rate of 33%. By 2020, we can expect China Agri-Industries Holdings’s bottom line to reach HK$1.6b, a jump from the current trailing-twelve-month of HK$1.3b. 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.
What can we expect from China Agri-Industries Holdings in the longer term?
The view from 3 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of 606'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.
This results in an annual growth rate of 19% based on the most recent earnings level of HK$1.3b to the final forecast of HK$2.5b by 2022. This leads to an EPS of HK$0.39 in the final year of projections relative to the current EPS of HK$0.26. In 2022, 606's profit margin will have expanded from 1.2% to 1.8%.
Future outlook is only one aspect when you're building an investment case for a stock. For China Agri-Industries Holdings, I've put together three fundamental factors you should further examine:
- 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 Agri-Industries Holdings 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 Agri-Industries Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Agri-Industries Holdings? 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.