China Lilang Limited (HKG:1234) just released its latest annual results and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 3.9% to hit CN¥3.5b. Statutory earnings per share (EPS) came in at CN¥0.44, some 4.0% above whatthe analysts had expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, China Lilang's four analysts are now forecasting revenues of CN¥4.05b in 2024. This would be a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 15% to CN¥0.51. In the lead-up to this report, the analysts had been modelling revenues of CN¥3.73b and earnings per share (EPS) of CN¥0.48 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that the analysts have increased their price target for China Lilang 18% to HK$5.42on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic China Lilang analyst has a price target of HK$5.75 per share, while the most pessimistic values it at HK$5.16. This is a very narrow spread of estimates, implying either that China Lilang is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. One thing stands out from these estimates, which is that China Lilang is forecast to grow faster in the future than it has in the past, with revenues expected to display 14% annualised growth until the end of 2024. If achieved, this would be a much better result than the 0.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.8% per year. So it looks like China Lilang is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards China Lilang following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for China Lilang going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for China Lilang 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.