Songcheng Performance Development Co.,Ltd (SZSE:300144) missed earnings with its latest second-quarter results, disappointing overly-optimistic forecasters. Earnings fell badly short of analyst estimates, with CN¥618m revenues missing by 11%, and statutory earnings per share (EPS) of CN¥0.11 falling short of forecasts by some -15%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Songcheng Performance DevelopmentLtd after the latest results.
After the latest results, the 13 analysts covering Songcheng Performance DevelopmentLtd are now predicting revenues of CN¥2.62b in 2024. If met, this would reflect a decent 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 745% to CN¥0.44. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.71b and earnings per share (EPS) of CN¥0.47 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The analysts made no major changes to their price target of CN¥12.61, suggesting the downgrades are not expected to have a long-term impact on Songcheng Performance DevelopmentLtd's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Songcheng Performance DevelopmentLtd analyst has a price target of CN¥17.07 per share, while the most pessimistic values it at CN¥10.50. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that Songcheng Performance DevelopmentLtd is forecast to grow faster in the future than it has in the past, with revenues expected to display 23% annualised growth until the end of 2024. If achieved, this would be a much better result than the 11% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually. So it looks like Songcheng Performance DevelopmentLtd is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Songcheng Performance DevelopmentLtd. They also downgraded Songcheng Performance DevelopmentLtd's revenue estimates, but industry data suggests that it is expected to grow faster 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 forecasts for Songcheng Performance DevelopmentLtd going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Songcheng Performance DevelopmentLtd 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.
