A week ago, Hisense Home Appliances Group Co., Ltd. (SZSE:000921) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 5.7% to hit CN¥23b. Hisense Home Appliances Group also reported a statutory profit of CN¥0.72, which was an impressive 29% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Hisense Home Appliances Group after the latest results.
Following the latest results, Hisense Home Appliances Group's eleven analysts are now forecasting revenues of CN¥96.2b in 2024. This would be a satisfactory 7.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 8.9% to CN¥2.56. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥94.4b and earnings per share (EPS) of CN¥2.38 in 2024. So the consensus seems to have become somewhat more optimistic on Hisense Home Appliances Group's earnings potential following these results.
There's been no major changes to the consensus price target of CN¥35.53, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Hisense Home Appliances Group at CN¥40.00 per share, while the most bearish prices it at CN¥31.00. This is a very narrow spread of estimates, implying either that Hisense Home Appliances Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Hisense Home Appliances Group's revenue growth is expected to slow, with the forecast 9.8% annualised growth rate until the end of 2024 being well below the historical 20% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.7% annually. Factoring in the forecast slowdown in growth, it looks like Hisense Home Appliances Group is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Hisense Home Appliances Group's earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Hisense Home Appliances Group analysts - going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Hisense Home Appliances Group you should be aware of.
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