Last week, you might have seen that Tonghua Dongbao Pharmaceutical Co., Ltd. (SHSE:600867) released its full-year result to the market. The early response was not positive, with shares down 2.8% to CN¥9.32 in the past week. The result was positive overall - although revenues of CN¥3.1b were in line with what the analysts predicted, Tonghua Dongbao Pharmaceutical surprised by delivering a statutory profit of CN¥0.59 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
SHSE:600867 Earnings and Revenue Growth February 1st 2024
Taking into account the latest results, the current consensus from Tonghua Dongbao Pharmaceutical's five analysts is for revenues of CN¥3.47b in 2024. This would reflect a notable 12% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 9.7% to CN¥0.65. Before this earnings report, the analysts had been forecasting revenues of CN¥3.47b and earnings per share (EPS) of CN¥0.64 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at CN¥15.24, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Tonghua Dongbao Pharmaceutical at CN¥17.00 per share, while the most bearish prices it at CN¥14.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. It's clear from the latest estimates that Tonghua Dongbao Pharmaceutical's rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Tonghua Dongbao Pharmaceutical is expected to grow slower than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tonghua Dongbao Pharmaceutical's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Tonghua Dongbao Pharmaceutical's revenue is expected to perform worse than the wider industry. The consensus price target held steady at CN¥15.24, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Tonghua Dongbao Pharmaceutical going out to 2025, and you can see them free on our platform here.
Even so, be aware that Tonghua Dongbao Pharmaceutical is showing 2 warning signs in our investment analysis , you should know about...
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