China Tian Lun Gas Holdings Limited (HKG:1600): Will The Growth Last?

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On 31 December 2018, China Tian Lun Gas Holdings Limited (HKG:1600) announced its earnings update. Overall, analysts seem extremely confident, with earnings expected to grow by a high double-digit of 56% in the upcoming year, relative to the historical 5-year average growth rate of 21%. Presently, with latest-twelve-month earnings at CN¥569m, we should see this growing to CN¥890m by 2020. Below is a brief commentary on the longer term outlook the market has for China Tian Lun Gas Holdings. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for China Tian Lun Gas Holdings

How is China Tian Lun Gas Holdings going to perform in the near future?

The longer term expectations from the 10 analysts of 1600 is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of 1600's earnings growth over these next few years.

SEHK:1600 Past and Future Earnings, May 15th 2019

From the current net income level of CN¥569m and the final forecast of CN¥1.4b by 2022, the annual rate of growth for 1600’s earnings is 28%. EPS reaches CN¥1.38 in the final year of forecast compared to the current CN¥0.58 EPS today. In 2022, 1600's profit margin will have expanded from 11% to 15%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For China Tian Lun Gas Holdings, there are three relevant aspects 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 China Tian Lun Gas Holdings 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 China Tian Lun Gas Holdings is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Tian Lun Gas Holdings? 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.