Last week saw the newest full-year earnings release from Citic Pacific Special Steel Group Co., Ltd (SZSE:000708), an important milestone in the company's journey to build a stronger business. Revenue of CN¥114b surpassed estimates by 2.9%, although statutory earnings per share missed badly, coming in 22% below expectations at CN¥1.11 per share. 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, Citic Pacific Special Steel Group's seven analysts are now forecasting revenues of CN¥118.0b in 2024. This would be an okay 3.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 43% to CN¥1.62. Before this earnings report, the analysts had been forecasting revenues of CN¥117.6b and earnings per share (EPS) of CN¥1.96 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The consensus price target held steady at CN¥19.05, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Citic Pacific Special Steel Group at CN¥19.46 per share, while the most bearish prices it at CN¥18.63. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Citic Pacific Special Steel Group is an easy business to forecast or the the analysts are all using similar assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Citic Pacific Special Steel Group's past performance and to peers in the same industry. We would highlight that Citic Pacific Special Steel Group's revenue growth is expected to slow, with the forecast 3.5% annualised growth rate until the end of 2024 being well below the historical 9.4% 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 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Citic Pacific Special Steel Group 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 Citic Pacific Special Steel Group. On the plus side, there were no major changes to revenue estimates; although 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.
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 Citic Pacific Special Steel Group 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 3 warning signs for Citic Pacific Special Steel Group 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.