In December 2018, China Resources Gas Group Limited (HKG:1193) announced its earnings update. Overall, it seems that analyst forecasts are fairly in-line with historical trends, with earnings growth rate expected to be 13% in the upcoming year, relative to the past five-year average earnings growth of 14% per year. With trailing-twelve-month net income at current levels of HK$4.5b, we should see this rise to HK$5.0b in 2020. Below is a brief commentary on the longer term outlook the market has for China Resources Gas Group. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 25 analysts of 1193 is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 1193's earnings growth over these next few years.
From the current net income level of HK$4.5b and the final forecast of HK$6.3b by 2022, the annual rate of growth for 1193’s earnings is 10%. EPS reaches HK$2.88 in the final year of forecast compared to the current HK$2.04 EPS today. This high rate of growth of revenue squeezes margins, as analysts predict an upcoming margin contraction from the current 8.7% to 8.4% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For China Resources Gas Group, there are three key 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 Resources Gas Group 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 Resources Gas Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Resources Gas Group? 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.