Investors in China Resources Microelectronics Limited (SHSE:688396) had a good week, as its shares rose 6.8% to close at CN¥43.38 following the release of its yearly results. It was an okay result overall, with revenues coming in at CN¥9.9b, roughly what the analysts had been expecting. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from China Resources Microelectronics' eight analysts is for revenues of CN¥11.2b in 2024. This would reflect a meaningful 13% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 7.1% to CN¥1.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥12.1b and earnings per share (EPS) of CN¥1.46 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.
Despite the cuts to forecast earnings, there was no real change to the CN¥54.82 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values China Resources Microelectronics at CN¥68.00 per share, while the most bearish prices it at CN¥40.30. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of China Resources Microelectronics'historical trends, as the 13% annualised revenue growth to the end of 2024 is roughly in line with the 13% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 24% annually. So although China Resources Microelectronics is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CN¥54.82, 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 estimates - from multiple China Resources Microelectronics analysts - going out to 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with China Resources Microelectronics , and understanding this should be part of your investment process.
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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.