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What Should Investors Know About China Shenhua Energy Company Limited's (HKG:1088) Future?

Simply Wall St

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The most recent earnings update China Shenhua Energy Company Limited's (HKG:1088) released in December 2018 revealed that the business faced a slight headwind with earnings deteriorating from CN¥48b to CN¥44b, a change of -7.7%. Below, I've presented key growth figures on how market analysts predict China Shenhua Energy's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for China Shenhua Energy

Market analysts' prospects for this coming year seems pessimistic, with earnings decreasing by -1.4%. Beyond this, earnings are expected to continue to be below today's level, with a reduction of -3.4% in 2021, eventually reaching CN¥43b in 2022.

SEHK:1088 Past and Future Earnings, April 1st 2019

Even though it’s helpful to be aware of the rate of growth each year relative to today’s figure, it may be more valuable estimating the rate at which the business is rising or falling on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of China Shenhua Energy's earnings trajectory over time, fluctuate up and down. 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 -0.8%. This means, we can expect China Shenhua Energy will chip away at a rate of -0.8% every year for the next couple of years.

Next Steps:

For China Shenhua Energy, I've put together three relevant 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 1088 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 1088 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1088? 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.