Shareholders might have noticed that China Overseas Grand Oceans Group Limited (HKG:81) filed its full-year result this time last week. The early response was not positive, with shares down 4.4% to HK$1.74 in the past week.       Results overall were not great, with earnings of CN¥0.64 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥56b and were slightly better than forecasts.     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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

SEHK:81 Earnings and Revenue Growth March 27th 2024

Following the recent earnings report, the consensus from ten analysts covering China Overseas Grand Oceans Group is for revenues of CN¥47.9b in 2024. This implies a chunky 15% decline in revenue compared to the last 12 months.       Statutory earnings per share are expected to drop 13% to CN¥0.57 in the same period.        Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥51.1b and earnings per share (EPS) of CN¥0.91 in 2024.        From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.    

The consensus price target fell 29% to HK$2.80, 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.  Currently, the most bullish analyst values China Overseas Grand Oceans Group at HK$4.50 per share, while the most bearish prices it at HK$2.10.   This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.    

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates.     These estimates imply that revenue is expected to slow, with a forecast annualised decline of 15% by the end of 2024. This indicates a significant reduction from annual growth of 19% over the last five years.    By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.1% annually for the foreseeable future.  So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Overseas Grand Oceans Group is expected to lag the wider industry.    

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for China Overseas Grand Oceans Group.        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.       The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of China Overseas Grand Oceans Group's future valuation.  

With that said, the long-term trajectory of the company's earnings is a lot more important than next year.   At Simply Wall St, we have a full range of analyst estimates for China Overseas Grand Oceans Group going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - China Overseas Grand Oceans Group has   3 warning signs (and 1 which is a bit unpleasant)  we think you should know about.  

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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.