Chengxin Lithium Group Co., Ltd. (SZSE:002240) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Chengxin Lithium Group will make substantially more sales than they'd previously expected.
Following the upgrade, the consensus from dual analysts covering Chengxin Lithium Group is for revenues of CN¥8.3b in 2024, implying a disturbing 21% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to decrease 7.0% to CN¥2.33 in the same period. Before this latest update, the analysts had been forecasting revenues of CN¥7.2b and earnings per share (EPS) of CN¥2.33 in 2024. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.
The consensus price target increased 17% to CN¥17.45, with an improved revenue forecast carrying the promise of a more valuable business, in time.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 17% by the end of 2024. This indicates a significant reduction from annual growth of 43% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. It's pretty clear that Chengxin Lithium Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Chengxin Lithium Group.
Analysts are clearly in love with Chengxin Lithium Group at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as concerns around earnings quality. You can learn more, and discover the 2 other warning signs we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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