It's been a good week for Jiumaojiu International Holdings Limited (HKG:9922) shareholders, because the company has just released its latest half-year results, and the shares gained 5.3% to HK$2.56. It was a credible result overall, with revenues of CN¥3.1b and statutory earnings per share of CN¥0.05 both in line with analyst estimates, showing that Jiumaojiu International 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.
After the latest results, the 27 analysts covering Jiumaojiu International Holdings are now predicting revenues of CN¥6.43b in 2024. If met, this would reflect a satisfactory 4.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to plummet 25% to CN¥0.16 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥6.54b and earnings per share (EPS) of CN¥0.18 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.
It might be a surprise to learn that the consensus price target fell 11% to HK$4.41, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Jiumaojiu International Holdings analyst has a price target of HK$10.52 per share, while the most pessimistic values it at HK$2.30. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. It's pretty clear that there is an expectation that Jiumaojiu International Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.7% growth on an annualised basis. This is compared to a historical growth rate of 20% 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 12% annually. Factoring in the forecast slowdown in growth, it seems obvious that Jiumaojiu International 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 Jiumaojiu International 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 Jiumaojiu International Holdings' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Jiumaojiu International Holdings 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 Jiumaojiu International Holdings .
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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.
