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Hebei Construction Group Corporation Limited (HKG:1727): Will The Growth Last?

Simply Wall St

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Hebei Construction Group Corporation Limited's (HKG:1727) released its most recent earnings update in April 2019, which showed that the company experienced a small tailwind, leading to a single-digit earnings growth of 8.5%. Below, I've laid out key numbers on how market analysts view Hebei Construction Group's earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Hebei Construction Group

Market analysts' prospects for next year seems rather muted, with earnings rising by a single digit 9.4%. The growth outlook in the following year seems much more buoyant with rates arriving at double digit 33% compared to today’s earnings, and finally hitting CN¥1.8b by 2022.

SEHK:1727 Past and Future Earnings, June 25th 2019

Although it is useful to understand the growth rate year by year relative to today’s figure, it may be more valuable to gauge the rate at which the earnings are growing on average every year. The benefit of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Hebei Construction Group's earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 16%. This means, we can presume Hebei Construction Group will grow its earnings by 16% every year for the next couple of years.

Next Steps:

For Hebei Construction Group, I've put together three fundamental 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 1727 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 1727 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1727? 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.