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Sa Sa International Holdings Limited's (HKG:178) latest earnings update in June 2019 revealed that the business experienced a small tailwind, leading to a single-digit earnings growth of 1.5%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Sa Sa International Holdings's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Sa Sa International Holdings
Market analysts' prospects for the coming year seems pessimistic, with earnings reducing by -3.4%. But in the following year, there is a complete contrast in performance, with arriving at double digit 12% compared to today’s level and continues to increase to HK$572m in 2022.
Although it’s helpful to understand the growth rate year by year relative to today’s value, it may be more valuable analyzing the rate at which the company is growing every year, on average. The advantage of this method is that we can get a better picture of the direction of Sa Sa International Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.8%. This means that, we can presume Sa Sa International Holdings will grow its earnings by 6.8% every year for the next couple of years.
Next Steps:
For Sa Sa International Holdings, I've compiled three relevant aspects you should further examine:
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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 178 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 178 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 178? 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.