Shareholders of Pou Sheng International (Holdings) Limited (HKG:3813) will be pleased this week, given that the stock price is up 17% to HK$0.69 following its latest yearly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at CN¥20b, statutory earnings beat expectations by a notable 15%, coming in at CN¥0.095 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Pou Sheng International (Holdings)'s eight analysts is for revenues of CN¥20.9b in 2024. This reflects an okay 4.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 22% to CN¥0.12. In the lead-up to this report, the analysts had been modelling revenues of CN¥22.8b and earnings per share (EPS) of CN¥0.12 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
It'll come as no surprise then, to learn that the analysts have cut their price target 6.4% to HK$1.14. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Pou Sheng International (Holdings) at HK$2.83 per share, while the most bearish prices it at HK$0.67. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Pou Sheng International (Holdings) is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.2% annualised growth until the end of 2024. If achieved, this would be a much better result than the 6.1% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually for the foreseeable future. Although Pou Sheng International (Holdings)'s revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pou Sheng International (Holdings). 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Pou Sheng International (Holdings)'s future valuation.
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 Pou Sheng International (Holdings) going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Pou Sheng International (Holdings) 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.