The latest analyst coverage could presage a bad day for Shijiazhuang Shangtai Technology Co., Ltd. (SZSE:001301), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the latest consensus from Shijiazhuang Shangtai Technology's four analysts is for revenues of CN¥4.8b in 2023, which would reflect a decent 8.2% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to shrink 6.4% to CN¥2.91 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥5.4b and earnings per share (EPS) of CN¥3.87 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
View our latest analysis for Shijiazhuang Shangtai Technology
It'll come as no surprise then, to learn that the analysts have cut their price target 20% to CN¥61.82.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shijiazhuang Shangtai Technology's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Shijiazhuang Shangtai Technology's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 8.2% growth on an annualised basis. This is compared to a historical growth rate of 36% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 22% annually. Factoring in the forecast slowdown in growth, it seems obvious that Shijiazhuang Shangtai Technology is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Shijiazhuang Shangtai Technology.
That said, the analysts might have good reason to be negative on Shijiazhuang Shangtai Technology, given concerns around earnings quality. For more information, you can click here to discover this and the 2 other flags we've identified.
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