Zhejiang Sanhua Intelligent Controls Co.,Ltd (SZSE:002050) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥6.4b missed by 10%, and statutory earnings per share of CN¥0.17 fell short of forecasts by 23%. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
SZSE:002050 Earnings and Revenue Growth May 1st 2024
Following the latest results, Zhejiang Sanhua Intelligent ControlsLtd's 21 analysts are now forecasting revenues of CN¥31.4b in 2024. This would be a huge 24% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 28% to CN¥1.02. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥32.0b and earnings per share (EPS) of CN¥1.03 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of CN¥31.34, showing that the business is executing well and in line with expectations. 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 Zhejiang Sanhua Intelligent ControlsLtd at CN¥36.40 per share, while the most bearish prices it at CN¥23.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Zhejiang Sanhua Intelligent ControlsLtd's rate of growth is expected to accelerate meaningfully, with the forecast 33% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 20% 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 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Zhejiang Sanhua Intelligent ControlsLtd is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at CN¥31.34, 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 Zhejiang Sanhua Intelligent ControlsLtd going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Zhejiang Sanhua Intelligent ControlsLtd has 2 warning signs we think you should be aware of.
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