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Midea Real Estate Holding Limited (HKG:3990): What Can We Expect From This High Growth Stock?

Simply Wall St

In December 2018, Midea Real Estate Holding Limited (HKG:3990) released its most recent earnings announcement, which confirmed that the business experienced a large tailwind, leading to a high double-digit earnings growth of 68%. Below, I've laid out key growth figures on how market analysts view Midea Real Estate Holding's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

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Check out our latest analysis for Midea Real Estate Holding

Market analysts' prospects for next year seems positive, with earnings climbing by a robust 33%. This growth seems to continue into the following year with rates arriving at double digit 86% compared to today’s earnings, and finally hitting CN¥8.1b by 2022.

SEHK:3990 Past and Future Earnings, May 16th 2019

Even though it’s helpful to understand the growth each year relative to today’s value, it may be more valuable to determine the rate at which the earnings are moving every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of Midea Real Estate Holding's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 31%. This means, we can expect Midea Real Estate Holding will grow its earnings by 31% every year for the next few years.

Next Steps:

For Midea Real Estate Holding, I've put together three important factors you should look at:

  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 3990 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 3990 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 3990? 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.