The analysts covering Guangdong Hoshion Industrial Aluminium Co., Ltd. (SZSE:002824) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After this downgrade, Guangdong Hoshion Industrial Aluminium's dual analysts are now forecasting revenues of CN¥3.2b in 2024. This would be a reasonable 2.4% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 44% to CN¥0.69. Before this latest update, the analysts had been forecasting revenues of CN¥3.8b and earnings per share (EPS) of CN¥0.96 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 11% to CN¥15.11.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Guangdong Hoshion Industrial Aluminium's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Guangdong Hoshion Industrial Aluminium's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.4% growth on an annualised basis. This is compared to a historical growth rate of 22% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Guangdong Hoshion Industrial Aluminium is also expected to grow slower than other industry participants.
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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
There might be good reason for analyst bearishness towards Guangdong Hoshion Industrial Aluminium, like concerns around earnings quality. For more information, you can click here to discover this and the 2 other warning signs we've identified.
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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