Shareholders might have noticed that Hengan International Group Company Limited (HKG:1044) filed its interim result this time last week. The early response was not positive, with shares down 5.1% to HK$24.05 in the past week. Hengan International Group reported in line with analyst predictions, delivering revenues of CN¥12b and statutory earnings per share of CN¥2.42, suggesting the business is executing well and in line with its plan. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following the latest results, Hengan International Group's 15 analysts are now forecasting revenues of CN¥23.9b in 2024. This would be an okay 2.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 2.7% to CN¥2.50 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥24.5b and earnings per share (EPS) of CN¥2.65 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The analysts made no major changes to their price target of HK$29.90, suggesting the downgrades are not expected to have a long-term impact on Hengan International Group's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Hengan International Group at HK$41.05 per share, while the most bearish prices it at HK$25.03. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hengan International Group's past performance and to peers in the same industry. It's clear from the latest estimates that Hengan International Group's rate of growth is expected to accelerate meaningfully, with the forecast 4.2% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 8.7% annually. So it's clear that despite the acceleration in growth, Hengan International Group is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and 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 Hengan International Group analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Hengan International Group .

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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.