Today is shaping up negative for Jinan Shengquan Group Share Holding Co., Ltd. (SHSE:605589) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
After this downgrade, Jinan Shengquan Group Share Holding's four analysts are now forecasting revenues of CN¥11b in 2024. This would be a sizeable 26% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 29% to CN¥1.22. Prior to this update, the analysts had been forecasting revenues of CN¥13b and earnings per share (EPS) of CN¥1.27 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 5.4% to CN¥23.22.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Jinan Shengquan Group Share Holding's growth to accelerate, with the forecast 26% annualised growth to the end of 2024 ranking favourably alongside historical growth of 10% per annum 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 Jinan Shengquan Group Share Holding 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Jinan Shengquan Group Share Holding's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Jinan Shengquan Group Share Holding going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Jinan Shengquan Group Share Holding going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.