There's been a notable change in appetite for Hundsun Technologies Inc. (SHSE:600570) shares in the week since its yearly report, with the stock down 12% to CN¥22.08. Hundsun Technologies reported CN¥7.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of CN¥0.75 beat expectations, being 5.7% higher than what the analysts expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Hundsun Technologies from 20 analysts is for revenues of CN¥8.05b in 2024. If met, it would imply a decent 11% increase on its revenue over the past 12 months. Per-share earnings are expected to shoot up 21% to CN¥0.91. Before this earnings report, the analysts had been forecasting revenues of CN¥8.93b and earnings per share (EPS) of CN¥1.08 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
The analysts made no major changes to their price target of CN¥37.79, suggesting the downgrades are not expected to have a long-term impact on Hundsun Technologies' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Hundsun Technologies analyst has a price target of CN¥54.00 per share, while the most pessimistic values it at CN¥19.40. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hundsun Technologies' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Hundsun Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 17% 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 22% 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 Hundsun Technologies.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hundsun Technologies. 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. 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.
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 Hundsun Technologies going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Hundsun Technologies that we have uncovered.
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