Shareholders might have noticed that CITIC Securities Company Limited (SHSE:600030) filed its yearly result this time last week. The early response was not positive, with shares down 7.3% to CN¥19.31 in the past week. It was not a great result overall. While revenues of CN¥61b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit CN¥1.30 per share. 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.
Following the latest results, CITIC Securities' 13 analysts are now forecasting revenues of CN¥64.8b in 2024. This would be a reasonable 5.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 9.7% to CN¥1.46. In the lead-up to this report, the analysts had been modelling revenues of CN¥68.8b and earnings per share (EPS) of CN¥1.59 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 analysts made no major changes to their price target of CN¥25.89, suggesting the downgrades are not expected to have a long-term impact on CITIC Securities' valuation. 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 CITIC Securities, with the most bullish analyst valuing it at CN¥34.12 and the most bearish at CN¥20.57 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that CITIC Securities' revenue growth is expected to slow, with the forecast 5.7% annualised growth rate until the end of 2024 being well below the historical 10% 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 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that CITIC Securities is also expected to grow slower than other industry participants.
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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for CITIC Securities 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 CITIC Securities (1 is significant!) that you need to take into consideration.
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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.