Investors in Simcere Pharmaceutical Group Limited (HKG:2096) had a good week, as its shares rose 2.9% to close at HK$5.30 following the release of its full-year results. Results were roughly in line with estimates, with revenues of CN¥6.6b and statutory earnings per share of CN¥0.27. 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.
Taking into account the latest results, the consensus forecast from Simcere Pharmaceutical Group's six analysts is for revenues of CN¥7.47b in 2024. This reflects a decent 13% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 40% to CN¥0.39. In the lead-up to this report, the analysts had been modelling revenues of CN¥7.48b and earnings per share (EPS) of CN¥0.48 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at HK$8.63, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Simcere Pharmaceutical Group analyst has a price target of HK$10.00 per share, while the most pessimistic values it at HK$7.66. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Simcere Pharmaceutical Group's growth to accelerate, with the forecast 13% annualised growth to the end of 2024 ranking favourably alongside historical growth of 10% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Simcere Pharmaceutical Group to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Simcere Pharmaceutical Group. 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 held steady at HK$8.63, with the latest estimates not enough to have an impact on their price targets.
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 Simcere Pharmaceutical Group analysts - going out to 2026, and you can see them free on our platform here.
Even so, be aware that Simcere Pharmaceutical Group is showing 1 warning sign in our investment analysis , you should know about...
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.