Investors in Hansoh Pharmaceutical Group Company Limited (HKG:3692) had a good week, as its shares rose 4.2% to close at HK$15.48 following the release of its yearly results. It looks like a credible result overall - although revenues of CN¥10b were in line with what the analysts predicted, Hansoh Pharmaceutical Group surprised by delivering a statutory profit of CN¥0.55 per share, a notable 19% above expectations. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Hansoh Pharmaceutical Group from 21 analysts is for revenues of CN¥11.8b in 2024. If met, it would imply a decent 17% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 3.1% to CN¥0.57. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥11.6b and earnings per share (EPS) of CN¥0.54 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 7.5% to HK$17.67, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Hansoh Pharmaceutical Group, with the most bullish analyst valuing it at HK$27.96 and the most bearish at HK$13.16 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Hansoh Pharmaceutical 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 4.5% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hansoh Pharmaceutical Group to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Hansoh Pharmaceutical Group's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Hansoh Pharmaceutical Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Hansoh Pharmaceutical Group analysts - going out to 2026, and you can see them free on our platform here.
We also provide an overview of the Hansoh Pharmaceutical Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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.