The analysts covering Sichuan Em Technology Co., Ltd. (SHSE:601208) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the latest consensus from Sichuan Em Technology's six analysts is for revenues of CN¥5.0b in 2024, which would reflect a substantial 31% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 60% to CN¥0.54. Before this latest update, the analysts had been forecasting revenues of CN¥6.5b and earnings per share (EPS) of CN¥0.65 in 2024. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a real cut to earnings per share numbers as well.
Analysts made no major changes to their price target of CN¥14.21, suggesting the downgrades are not expected to have a long-term impact on Sichuan Em Technology's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sichuan Em Technology's past performance and to peers in the same industry. It's clear from the latest estimates that Sichuan Em Technology's rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 20% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sichuan Em Technology is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Sichuan Em Technology.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Sichuan Em Technology going out to 2026, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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.