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Shenzhen International Holdings Limited's (HKG:152) most recent earnings announcement in December 2018 showed that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 10%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Shenzhen International Holdings's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' expectations for next year seems pessimistic, with earnings decreasing by -1.8%. But in the following year, there is a complete contrast in performance, with earnings growth rates reaching double digit 12% compared to today’s level before declining. to HK$4.5b in 2022.
While it’s useful to understand the growth rate each year relative to today’s figure, it may be more valuable to evaluate the rate at which the earnings are moving on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Shenzhen International Holdings's earnings trajectory over time, be more volatile. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.5%. This means, we can presume Shenzhen International Holdings will grow its earnings by 3.5% every year for the next few years.
For Shenzhen International Holdings, I've put together three relevant aspects 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.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for 152's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 152? 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 firstname.lastname@example.org. 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.