China Resources Double-Crane Pharmaceutical Co.,Ltd. (SHSE:600062) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥10b, statutory earnings beat expectations 2.4%, with China Resources Double-Crane PharmaceuticalLtd reporting profits of CN¥1.30 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on China Resources Double-Crane PharmaceuticalLtd after the latest results.
Following the latest results, China Resources Double-Crane PharmaceuticalLtd's three analysts are now forecasting revenues of CN¥11.0b in 2024. This would be a decent 8.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 11% to CN¥1.43. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥11.8b and earnings per share (EPS) of CN¥1.50 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
The average price target climbed 5.4% to CN¥24.91despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. 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. There are some variant perceptions on China Resources Double-Crane PharmaceuticalLtd, with the most bullish analyst valuing it at CN¥26.00 and the most bearish at CN¥23.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. It's clear from the latest estimates that China Resources Double-Crane PharmaceuticalLtd's rate of growth is expected to accelerate meaningfully, with the forecast 8.0% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. So it's clear that despite the acceleration in growth, China Resources Double-Crane PharmaceuticalLtd is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for China Resources Double-Crane PharmaceuticalLtd. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 China Resources Double-Crane PharmaceuticalLtd analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for China Resources Double-Crane PharmaceuticalLtd that you should be aware of.
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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.
