Investors in Chongqing Brewery Co., Ltd. (SHSE:600132) had a good week, as its shares rose 6.4% to close at CN¥57.84 following the release of its annual results. Revenues of CN¥15b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥2.76, missing estimates by 7.1%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Chongqing Brewery from 25 analysts is for revenues of CN¥15.7b in 2024. If met, it would imply a satisfactory 5.9% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 11% to CN¥3.05. Before this earnings report, the analysts had been forecasting revenues of CN¥16.4b and earnings per share (EPS) of CN¥3.40 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
The analysts made no major changes to their price target of CN¥82.01, suggesting the downgrades are not expected to have a long-term impact on Chongqing Brewery's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Chongqing Brewery at CN¥116 per share, while the most bearish prices it at CN¥51.84. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Chongqing Brewery's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.9% growth on an annualised basis. This is compared to a historical growth rate of 19% 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 14% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Chongqing Brewery.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Chongqing Brewery. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥82.01, 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. At Simply Wall St, we have a full range of analyst estimates for Chongqing Brewery going out to 2026, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 1 warning sign for Chongqing Brewery that you should be aware of.
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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.