Shareholders might have noticed that China Overseas Grand Oceans Group Limited (HKG:81) filed its yearly result this time last week. The early response was not positive, with shares down 2.5% to HK$1.53 in the past week. Revenue of CN¥56b surpassed estimates by 4.3%, although statutory earnings per share missed badly, coming in 29% below expectations at CN¥0.64 per share. 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 the eight analysts covering China Overseas Grand Oceans Group, is for revenues of CN¥48.0b in 2024. This implies an uneasy 15% reduction in China Overseas Grand Oceans Group's revenue over the past 12 months. Statutory earnings per share are expected to fall 12% to CN¥0.57 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥48.1b and earnings per share (EPS) of CN¥0.57 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of HK$2.51, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on China Overseas Grand Oceans Group, with the most bullish analyst valuing it at HK$3.10 and the most bearish at HK$2.10 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. We would highlight that revenue is expected to reverse, with a forecast 15% annualised decline to the end of 2024. That is a notable change from historical growth of 19% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Overseas Grand Oceans Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 China Overseas Grand Oceans Group analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 4 warning signs for China Overseas Grand Oceans Group (of which 1 can't be ignored!) you should know about.
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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.