U.S. Markets closed

SITC International Holdings Company Limited (HKG:1308): Poised For Long-Term Success?

Simply Wall St

In April 2019, SITC International Holdings Company Limited (HKG:1308) released its most recent earnings announcement, which showed that the company benefited from a small tailwind, eventuating to a single-digit earnings growth of 4.7%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive SITC International Holdings's earnings growth trajectory 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.

View our latest analysis for SITC International Holdings

Market analysts' consensus outlook for next year seems optimistic, with earnings climbing by a robust 11%. This growth seems to continue into the following year with rates arriving at double digit 23% compared to today’s earnings, and finally hitting US$273m by 2022.

SEHK:1308 Past and Future Earnings, August 22nd 2019

Even though it is useful to be aware of the growth rate year by year relative to today’s level, it may be more valuable determining the rate at which the company is moving every year, on average. The advantage of this approach is that we can get a better picture of the direction of SITC International 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 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 11%. This means, we can assume SITC International Holdings will grow its earnings by 11% every year for the next few years.

Next Steps:

For SITC International Holdings, there are three relevant factors you should further research:

  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 1308 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 1308 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 1308? 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.