The annual results for CIMC Vehicles (Group) Co., Ltd. (HKG:1839) were released last week, making it a good time to revisit its performance. Revenues came in 5.3% below expectations, at CN¥25b. Statutory earnings per share were relatively better off, with a per-share profit of CN¥1.22 being roughly in line with analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on CIMC Vehicles (Group) after the latest results.
Taking into account the latest results, the current consensus from CIMC Vehicles (Group)'s dual analysts is for revenues of CN¥29.4b in 2024. This would reflect a meaningful 17% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to crater 35% to CN¥0.79 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥31.0b and earnings per share (EPS) of CN¥0.89 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.
It'll come as no surprise then, to learn that the analysts have cut their price target 6.0% to HK$7.47.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that CIMC Vehicles (Group)'s rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 0.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect CIMC Vehicles (Group) to grow faster than the wider industry.
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. They also downgraded CIMC Vehicles (Group)'s revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. 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 analyst estimates for CIMC Vehicles (Group) going out as far as 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with CIMC Vehicles (Group) , and understanding it should be part of your investment process.
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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.