Last week saw the newest yearly earnings release from Shanghai Jin Jiang International Hotels Co., Ltd. (SHSE:600754), an important milestone in the company's journey to build a stronger business. Revenues of CN¥15b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥0.94, missing estimates by 4.4%. 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 current consensus from Shanghai Jin Jiang International Hotels' 18 analysts is for revenues of CN¥15.4b in 2024. This would reflect a modest 4.8% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 63% to CN¥1.53. Before this earnings report, the analysts had been forecasting revenues of CN¥15.8b and earnings per share (EPS) of CN¥1.49 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.
There's been no real change to the average price target of CN¥37.31, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Shanghai Jin Jiang International Hotels, with the most bullish analyst valuing it at CN¥68.00 and the most bearish at CN¥22.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Shanghai Jin Jiang International Hotels is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.8% annualised growth until the end of 2024. If achieved, this would be a much better result than the 3.5% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 19% annually for the foreseeable future. So although Shanghai Jin Jiang International Hotels' revenue growth is expected to improve, it is still expected to grow slower than the 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 Jin Jiang International Hotels' earnings potential 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. Even so, earnings are more important to the intrinsic value of the business. The consensus price target held steady at CN¥37.31, with the latest estimates not enough to have an impact on their price targets.
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 forecasts for Shanghai Jin Jiang International Hotels 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 1 warning sign with Shanghai Jin Jiang International Hotels , and understanding it 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.