Last week, you might have seen that Angang Steel Company Limited (HKG:347) released its full-year result to the market. The early response was not positive, with shares down 9.7% to HK$1.30 in the past week. Revenues were CN¥114b, with Angang Steel reporting some 3.1% below analyst 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 eight analysts covering Angang Steel provided consensus estimates of CN¥109.0b revenue in 2024, which would reflect a small 4.0% decline over the past 12 months. Losses are presumed to be contained, narrowing 15% from last year to CN¥0.40, on a statutory basis. In the lead-up to this report, the analysts had been modelling revenues of CN¥119.9b and earnings per share (EPS) of CN¥0.045 in 2024. There looks to have been a significant drop in sentiment regarding Angang Steel's prospects after these latest results, with a small dip in revenues and the analysts now forecasting a loss instead of a profit.
There was no major change to the consensus price target of HK$2.19, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Angang Steel, with the most bullish analyst valuing it at HK$3.29 and the most bearish at HK$1.55 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.0% by the end of 2024. This indicates a significant reduction from annual growth of 4.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Angang Steel is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting Angang Steel to become unprofitable next year. 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. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Angang Steel. Long-term earnings power is much more important than next year's profits. We have forecasts for Angang Steel going out to 2026, and you can see them free on our platform here.
It might also be worth considering whether Angang Steel's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.