Shanghai Industrial Holdings Limited (HKG:363) defied analyst predictions to release its annual results, which were ahead of market expectations. It was a decent earnings report, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 19% higher than the analyst had forecast, at HK$33b, while EPS of HK$3.15 beat analyst models by 14%. Following the result, the analyst has 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. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.
Taking into account the latest results, Shanghai Industrial Holdings' one analyst currently expect revenues in 2024 to be HK$33.2b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 2.5% to HK$3.23. Yet prior to the latest earnings, the analyst had been anticipated revenues of HK$29.0b and earnings per share (EPS) of HK$2.52 in 2024. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.
As a result, it might be a surprise to see thatthe analyst has cut their price target 6.9% to HK$12.80, which could suggest the forecast improvement in performance is not expected to last.
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 can infer from the latest estimates that forecasts expect a continuation of Shanghai Industrial Holdings'historical trends, as the 1.4% annualised revenue growth to the end of 2024 is roughly in line with the 1.5% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.3% per year. So it's pretty clear that Shanghai Industrial Holdings is expected to grow slower than similar companies in the same industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Shanghai Industrial Holdings' earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Shanghai Industrial Holdings' future valuation.
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. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
You still need to take note of risks, for example - Shanghai Industrial Holdings has 2 warning signs (and 1 which is significant) 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.