The latest analyst coverage could presage a bad day for China Green Electricity Investment of Tianjin Co., Ltd. (SZSE:000537), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.
After this downgrade, China Green Electricity Investment of Tianjin's one analyst is now forecasting revenues of CN¥5.4b in 2024. This would be a major 45% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to expand 19% to CN¥0.59. Previously, the analyst had been modelling revenues of CN¥6.5b and earnings per share (EPS) of CN¥0.79 in 2024. Indeed, we can see that the analyst is a lot more bearish about China Green Electricity Investment of Tianjin's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
Despite the cuts to forecast earnings, there was no real change to the CN¥11.80 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that China Green Electricity Investment of Tianjin's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 45% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 40% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.5% annually. Not only are China Green Electricity Investment of Tianjin's revenues expected to improve, it seems that the analyst is also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of China Green Electricity Investment of Tianjin.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with China Green Electricity Investment of Tianjin's business, like concerns around earnings quality. For more information, you can click here to discover this and the 1 other warning sign we've identified.
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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.