The second-quarter results for Shanghai @hub Co.,Ltd. (SHSE:603881) were released last week, making it a good time to revisit its performance. Results overall were not great, with earnings of CN¥0.04 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥397m and were slightly better than forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Shanghai @hubLtd's five analysts is for revenues of CN¥1.62b in 2024. This would reflect a credible 3.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to increase 4.4% to CN¥0.22. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥1.62b and earnings per share (EPS) of CN¥0.30 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥16.45, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Shanghai @hubLtd at CN¥17.20 per share, while the most bearish prices it at CN¥13.60. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Shanghai @hubLtd is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Shanghai @hubLtd's revenue growth is expected to slow, with the forecast 6.0% annualised growth rate until the end of 2024 being well below the historical 15% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shanghai @hubLtd.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shanghai @hubLtd. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Shanghai @hubLtd's revenue is expected to perform worse than the wider industry. The consensus price target held steady at CN¥16.45, 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 Shanghai @hubLtd analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for Shanghai @hubLtd that we have uncovered.
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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.
