It's been a good week for AsiaInfo Technologies Limited (HKG:1675) shareholders, because the company has just released its latest yearly results, and the shares gained 7.6% to HK$7.49. It looks like a pretty bad result, all things considered. Although revenues of CN¥7.9b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 23% to hit CN¥0.57 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
SEHK:1675 Earnings and Revenue Growth March 20th 2024
Taking into account the latest results, the consensus forecast from AsiaInfo Technologies' three analysts is for revenues of CN¥8.38b in 2024. This reflects a reasonable 6.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 74% to CN¥0.99. Before this earnings report, the analysts had been forecasting revenues of CN¥8.82b and earnings per share (EPS) of CN¥1.10 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
The consensus price target fell 13% to HK$12.29, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values AsiaInfo Technologies at HK$15.86 per share, while the most bearish prices it at HK$9.90. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that AsiaInfo Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.2% growth on an annualised basis. This is compared to a historical growth rate of 9.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 19% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than AsiaInfo Technologies.
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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for AsiaInfo Technologies going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for AsiaInfo Technologies that you need to be mindful 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.