Investors in Yadea Group Holdings Ltd. (HKG:1585) had a good week, as its shares rose 6.5% to close at HK$14.36 following the release of its full-year results. Revenues came in 4.1% below expectations, at CN¥35b. Statutory earnings per share were relatively better off, with a per-share profit of CN¥0.88 being roughly in line with analyst estimates. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Yadea Group Holdings' twelve analysts are now forecasting revenues of CN¥40.0b in 2024. This would be a decent 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 19% to CN¥1.05. In the lead-up to this report, the analysts had been modelling revenues of CN¥43.1b and earnings per share (EPS) of CN¥1.06 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The consensus has reconfirmed its price target of HK$18.82, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Yadea Group Holdings' market value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Yadea Group Holdings analyst has a price target of HK$25.13 per share, while the most pessimistic values it at HK$16.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yadea Group Holdings' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Yadea Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. Compare this to the 13 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it looks like Yadea Group Holdings is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Even so, long term profitability is more important for the value creation process. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Yadea Group Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Yadea Group Holdings going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Yadea Group Holdings .
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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.