It's been a good week for Zhejiang Taihua New Material Co.,Ltd (SHSE:603055) shareholders, because the company has just released its latest yearly results, and the shares gained 3.2% to CN¥10.37. It was a workmanlike result, with revenues of CN¥5.1b coming in 7.5% ahead of expectations, and statutory earnings per share of CN¥0.50, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the six analysts covering Zhejiang Taihua New MaterialLtd are now predicting revenues of CN¥6.14b in 2024. If met, this would reflect a sizeable 21% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 37% to CN¥0.74. Before this earnings report, the analysts had been forecasting revenues of CN¥6.03b and earnings per share (EPS) of CN¥0.77 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The average price target fell 10% to CN¥13.37, with reduced earnings forecasts clearly tied to a lower valuation estimate. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Zhejiang Taihua New MaterialLtd at CN¥14.25 per share, while the most bearish prices it at CN¥12.85. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Zhejiang Taihua New MaterialLtd's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Zhejiang Taihua New MaterialLtd is expected to grow much 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhejiang Taihua New MaterialLtd's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Zhejiang Taihua New MaterialLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Zhejiang Taihua New MaterialLtd analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Zhejiang Taihua New MaterialLtd (2 make us uncomfortable) you should be aware of.
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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.