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In June 2018, ASM Pacific Technology Limited (HKG:522) announced its earnings update. Overall, analyst consensus outlook seem conservative, with earnings growth rate expected to be 9.0% next year, which is within range of the past five-year average earnings growth of 9.1%. With trailing-twelve-month net income at current levels of HK$2.72b, we should see this rise to HK$2.97b in 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for ASM Pacific Technology in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
See our latest analysis for ASM Pacific Technology
What can we expect from ASM Pacific Technology in the longer term?
The view from 22 analysts over the next three years 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 522, 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.
This results in an annual growth rate of 7.4% based on the most recent earnings level of HK$2.82b to the final forecast of HK$3.64b by 2021. This leads to an EPS of HK$8.42 in the final year of projections relative to the current EPS of HK$6.9. The bottom-line growth seems to be caused by cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2021, 522’s profit margin will have expanded from 16.1% to 17.1%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For ASM Pacific Technology, I’ve put together three relevant factors you should further research:
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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.
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Valuation: What is ASM Pacific Technology 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 ASM Pacific Technology is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ASM Pacific Technology? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.