As you might know, Yunnan Yuntianhua Co., Ltd. (SHSE:600096) last week released its latest annual, and things did not turn out so great for shareholders. Yunnan Yuntianhua missed analyst forecasts, with revenues of CN¥69b and statutory earnings per share (EPS) of CN¥2.47, falling short by 3.3% and 8.0% respectively. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Yunnan Yuntianhua's seven analysts is for revenues of CN¥71.3b in 2024. This would reflect a modest 3.2% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 6.0% to CN¥2.61. In the lead-up to this report, the analysts had been modelling revenues of CN¥73.3b and earnings per share (EPS) of CN¥2.87 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The consensus price target fell 17% to CN¥23.25, with the weaker earnings outlook clearly leading valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Yunnan Yuntianhua, with the most bullish analyst valuing it at CN¥24.00 and the most bearish at CN¥22.50 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Yunnan Yuntianhua's revenue growth is expected to slow, with the forecast 3.2% annualised growth rate until the end of 2024 being well below the historical 7.8% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% per year. Factoring in the forecast slowdown in growth, it seems obvious that Yunnan Yuntianhua is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Yunnan Yuntianhua. 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 Yunnan Yuntianhua going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Yunnan Yuntianhua that you need to take into consideration.
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