ENN Energy Holdings Limited (HKG:2688) shareholders are probably feeling a little disappointed, since its shares fell 2.4% to HK$54.00 in the week after its latest interim results. It was a credible result overall, with revenues of CN¥55b and statutory earnings per share of CN¥6.04 both in line with analyst estimates, showing that ENN Energy Holdings is executing in line with expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, ENN Energy Holdings' 21 analysts are forecasting 2024 revenues to be CN¥115.8b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 8.9% to CN¥5.87. In the lead-up to this report, the analysts had been modelling revenues of CN¥117.4b and earnings per share (EPS) of CN¥6.34 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The average price target fell 7.1% to HK$68.85, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 ENN Energy Holdings, with the most bullish analyst valuing it at HK$79.04 and the most bearish at HK$58.03 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that ENN Energy Holdings' revenue growth is expected to slow, with the forecast 2.6% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.3% annually. Factoring in the forecast slowdown in growth, it seems obvious that ENN Energy Holdings is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ENN Energy Holdings. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ENN Energy Holdings' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for ENN Energy Holdings going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for ENN Energy Holdings that you need to take into consideration.
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.