As you might know, Shandong Hualu-Hengsheng Chemical Co., Ltd. (SHSE:600426) last week released its latest full-year, and things did not turn out so great for shareholders. Shandong Hualu-Hengsheng Chemical missed earnings this time around, with CN¥27b revenue coming in 3.7% below what the analysts had modelled. Statutory earnings per share (EPS) of CN¥1.69 also fell short of expectations by 17%. 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.
After the latest results, the twelve analysts covering Shandong Hualu-Hengsheng Chemical are now predicting revenues of CN¥33.6b in 2024. If met, this would reflect a major 23% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 31% to CN¥2.20. In the lead-up to this report, the analysts had been modelling revenues of CN¥37.9b and earnings per share (EPS) of CN¥2.88 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shandong Hualu-Hengsheng Chemical's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
It'll come as no surprise then, to learn that the analysts have cut their price target 9.7% to CN¥36.13. 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. The most optimistic Shandong Hualu-Hengsheng Chemical analyst has a price target of CN¥39.00 per share, while the most pessimistic values it at CN¥34.08. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shandong Hualu-Hengsheng Chemical's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Shandong Hualu-Hengsheng Chemical'shistorical trends, as the 23% annualised revenue growth to the end of 2024 is roughly in line with the 19% 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 17% per year. So it's pretty clear that Shandong Hualu-Hengsheng Chemical is forecast to grow substantially faster than its industry.
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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Shandong Hualu-Hengsheng Chemical analysts - going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Shandong Hualu-Hengsheng Chemical (1 makes us a bit uncomfortable!) 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.