Shareholders will be ecstatic, with their stake up 23% over the past week following SICC Co., Ltd.'s (SHSE:688234) latest quarterly results. It looks like a credible result overall - although revenues of CN¥426m were what the analysts expected, SICC surprised by delivering a (statutory) profit of CN¥0.11 per share, an impressive 86% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the eleven analysts covering SICC are now predicting revenues of CN¥1.90b in 2024. If met, this would reflect a sizeable 28% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 442% to CN¥0.36. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.25b and earnings per share (EPS) of CN¥0.33 in 2024. Indeed we can see that the consensus opinion has undergone some fundamental changes after the latest results, with a substantial drop in revenues at the same time as boosting EPS forecasts.
The consensus has made no major changes to the price target of CN¥68.29, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values SICC at CN¥95.00 per share, while the most bearish prices it at CN¥39.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that SICC's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 39% growth on an annualised basis. This is compared to a historical growth rate of 174% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 23% per year. Even after the forecast slowdown in growth, it seems obvious that SICC is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards SICC following these results. They also downgraded SICC's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at CN¥68.29, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on SICC. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple SICC analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with SICC .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.