After China Resources Pharmaceutical Group Limited’s (HKG:3320) earnings announcement on 31 December 2018, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 19% in the upcoming year against the past 5-year average growth rate of 11%. With trailing-twelve-month net income at current levels of HK$4.0b, we should see this rise to HK$4.8b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for China Resources Pharmaceutical Group

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What can we expect from China Resources Pharmaceutical Group in the longer term?

Over the next three years, it seems the consensus view of the 12 analysts covering 3320 is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

By 2022, 3320’s earnings should reach HK$6.3b, from current levels of HK$4.0b, resulting in an annual growth rate of 15%. This leads to an EPS of HK$1 in the final year of projections relative to the current EPS of HK$0.64. In 2022, 3320’s profit margin will have expanded from 2.1% to 2.5%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For China Resources Pharmaceutical Group, I’ve compiled three fundamental factors 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 China Resources Pharmaceutical Group 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 Pharmaceutical Group is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of China Resources Pharmaceutical Group? 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.