Sinopec Kantons Holdings Limited (HKG:934): Is It A Good Long Term Opportunity?
In December 2018, Sinopec Kantons Holdings Limited (HKG:934) released its latest earnings announcement, which revealed that the company gained from a slight tailwind, eventuating to a single-digit earnings growth of 4.5%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Sinopec Kantons Holdings's earnings growth outlook over the next few 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.
See our latest analysis for Sinopec Kantons Holdings
Market analysts' prospects for next year seems positive, with earnings rising by a robust 12%. This growth seems to continue into the following year with rates arriving at double digit 21% compared to today’s earnings, and finally hitting HK$1.6b by 2022.
Although it’s informative knowing the rate of growth year by year relative to today’s value, it may be more beneficial to analyze the rate at which the business is growing every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Sinopec Kantons Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. 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 8.4%. This means that, we can assume Sinopec Kantons Holdings will grow its earnings by 8.4% every year for the next few years.
Next Steps:
For Sinopec Kantons Holdings, I've put together three fundamental 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 934 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 934 is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 934? 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.
