China Resources Land Limited (HKG:1109): Is It A Smart Long Term Opportunity?
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Since China Resources Land Limited (HKG:1109) released its earnings in December 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 7.0% next year compared with the higher past 5-year average growth rate of 15%. By 2020, we can expect China Resources Land’s bottom line to reach CN¥26b, a jump from the current trailing-twelve-month of CN¥24b. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
See our latest analysis for China Resources Land
How is China Resources Land going to perform in the near future?
The longer term view from the 26 analysts covering 1109 is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for 1109, 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.
From the current net income level of CN¥24b and the final forecast of CN¥35b by 2022, the annual rate of growth for 1109’s earnings is 12%. This leads to an EPS of CN¥4.98 in the final year of projections relative to the current EPS of CN¥3.5. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 20% to 15% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For China Resources Land, I've put together three key 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 China Resources Land 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 Resources Land is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Resources Land? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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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.