As you might know, Chongqing Fuling Zhacai Group Co., Ltd. (SZSE:002507) recently reported its full-year numbers. Revenues came in 2.5% below expectations, at CN¥2.4b. Statutory earnings per share were relatively better off, with a per-share profit of CN¥0.72 being roughly in line with analyst estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Chongqing Fuling Zhacai Group after the latest results.
Taking into account the latest results, the current consensus from Chongqing Fuling Zhacai Group's 13 analysts is for revenues of CN¥2.72b in 2024. This would reflect a decent 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to expand 13% to CN¥0.81. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.78b and earnings per share (EPS) of CN¥0.83 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the CN¥16.62 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Chongqing Fuling Zhacai Group at CN¥20.00 per share, while the most bearish prices it at CN¥11.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chongqing Fuling Zhacai Group's past performance and to peers in the same industry. The analysts are definitely expecting Chongqing Fuling Zhacai Group's growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Chongqing Fuling Zhacai Group is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Chongqing Fuling Zhacai Group. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target held steady at CN¥16.62, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Chongqing Fuling Zhacai Group analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Chongqing Fuling Zhacai Group (including 1 which is a bit unpleasant) .
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