Shareholders of Precision Tsugami (China) Corporation Limited (HKG:1651) will be pleased this week, given that the stock price is up 18% to HK$9.89 following its latest annual results. Results overall were respectable, with statutory earnings of CN¥1.75 per share roughly in line with what the analysts had forecast. Revenues of CN¥4.4b came in 8.2% ahead of analyst predictions. 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 Precision Tsugami (China)SEHK:1651 Earnings and Revenue Growth June 30th 2022
Taking into account the latest results, the current consensus from Precision Tsugami (China)'s twin analysts is for revenues of CN¥5.20b in 2023, which would reflect a decent 18% increase on its sales over the past 12 months. Statutory earnings per share are forecast to decrease 5.0% to CN¥1.67 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥4.83b and earnings per share (EPS) of CN¥1.63 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of HK$15.63, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Precision Tsugami (China)'s rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Precision Tsugami (China) is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Precision Tsugami (China)'s earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at HK$15.63, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Precision Tsugami (China). Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Precision Tsugami (China) (including 1 which makes us a bit uncomfortable) .
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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.