Last week, you might have seen that Want Want China Holdings Limited (HKG:151) released its yearly result to the market. The early response was not positive, with shares down 7.1% to HK$6.82 in the past week. Results were roughly in line with estimates, with revenues of CN¥24b and statutory earnings per share of CN¥0.35. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Want Want China HoldingsSEHK:151 Earnings and Revenue Growth June 30th 2022
Taking into account the latest results, the most recent consensus for Want Want China Holdings from 18 analysts is for revenues of CN¥25.3b in 2023 which, if met, would be a credible 5.7% increase on its sales over the past 12 months. Statutory earnings per share are predicted to increase 4.3% to CN¥0.37. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥25.4b and earnings per share (EPS) of CN¥0.39 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at HK$7.65, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. There are some variant perceptions on Want Want China Holdings, with the most bullish analyst valuing it at HK$12.47 and the most bearish at HK$6.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Want Want China Holdings' past performance and to peers in the same industry. The analysts are definitely expecting Want Want China Holdings' growth to accelerate, with the forecast 5.7% annualised growth to the end of 2023 ranking favourably alongside historical growth of 3.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 8.6% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Want Want China Holdings is expected to grow slower than 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 Want Want China Holdings. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Want Want China Holdings' revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Want Want China Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Want Want China Holdings going out to 2025, and you can see them free on our platform here..
Even so, be aware that Want Want China Holdings is showing 1 warning sign in our investment analysis , you should know about...
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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.