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On 31 December 2018, Tongda Group Holdings Limited (HKG:698) released its earnings update. Generally, it seems that analyst forecasts are substantially optimistic, as a 60% rise in profits is expected in the upcoming year, against the historical 5-year average growth rate of 17%. Presently, with latest-twelve-month earnings at HK$543m, we should see this growing to HK$870m by 2020. Below is a brief commentary on the longer term outlook the market has for Tongda Group Holdings. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Tongda Group Holdings in the longer term?
Longer term expectations from the 13 analysts covering 698’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for 698, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, 698's earnings should reach HK$1.4b, from current levels of HK$543m, resulting in an annual growth rate of 27%. EPS reaches HK$0.21 in the final year of forecast compared to the current HK$0.088 EPS today. Margins are currently sitting at 6.1%, which is expected to expand to 10% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Tongda Group Holdings, I've put together three relevant factors you should further research:
- 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 Tongda Group 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 Tongda Group Holdings is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Tongda Group 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 firstname.lastname@example.org. 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.