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West China Cement Limited (HKG:2233): Immense Growth Potential?

Simply Wall St

The latest earnings announcement West China Cement Limited (HKG:2233) released in April 2019 confirmed that the company gained from a strong tailwind, eventuating to a high double-digit earnings growth of 63%. Below, I've laid out key numbers on how market analysts perceive West China Cement's earnings growth outlook 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.

See our latest analysis for West China Cement

Analysts' outlook for next year seems positive, with earnings growing by a robust 41%. However, earnings is forecasted to fall thereafter, reaching CN¥1.5b in 2022.

SEHK:2233 Past and Future Earnings, August 12th 2019

Although it is informative knowing the rate of growth each year relative to today’s level, it may be more valuable determining the rate at which the business is growing every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of West China Cement's earnings trajectory over time, be more volatile. To compute this rate, I've inserted 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 5.1%. This means that, we can expect West China Cement will grow its earnings by 5.1% every year for the next couple of years.

Next Steps:

For West China Cement, there are three essential aspects 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 2233 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 2233 is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 2233? 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.