Last week saw the newest annual earnings release from China Everbright Environment Group Limited (HKG:257), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of HK$32b were in line with what the analysts predicted, China Everbright Environment Group surprised by delivering a statutory profit of HK$0.72 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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, China Everbright Environment Group's seven analysts currently expect revenues in 2024 to be HK$31.6b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 3.1% to HK$0.74. In the lead-up to this report, the analysts had been modelling revenues of HK$32.0b and earnings per share (EPS) of HK$0.91 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 9.0% to HK$3.48, suggesting the revised estimates are not indicative of a weaker long-term future for the business. 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. The most optimistic China Everbright Environment Group analyst has a price target of HK$4.55 per share, while the most pessimistic values it at HK$2.90. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 1.4% annualised decline to the end of 2024. That is a notable change from historical growth of 1.9% 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 7.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Everbright Environment 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 Everbright Environment Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for China Everbright Environment Group going out to 2026, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with China Everbright Environment Group (at least 1 which is concerning) , and understanding them should be part of your investment process.
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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.