Shanghai Mechanical & Electrical Industry Co.,Ltd. (SHSE:600835) shareholders are probably feeling a little disappointed, since its shares fell 7.3% to CN¥12.07 in the week after its latest yearly results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥22b, statutory earnings were in line with expectations, at CN¥0.98 per share. The analyst 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. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.
Following last week's earnings report, Shanghai Mechanical & Electrical IndustryLtd's single analyst are forecasting 2024 revenues to be CN¥22.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 2.3% to CN¥1.00. In the lead-up to this report, the analyst had been modelling revenues of CN¥25.4b and earnings per share (EPS) of CN¥1.19 in 2024. Indeed, we can see that the analyst is a lot more bearish about Shanghai Mechanical & Electrical IndustryLtd's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
The analyst made no major changes to their price target of CN¥14.00, suggesting the downgrades are not expected to have a long-term impact on Shanghai Mechanical & Electrical IndustryLtd's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Mechanical & Electrical IndustryLtd's past performance and to peers in the same industry. We would highlight that Shanghai Mechanical & Electrical IndustryLtd's revenue growth is expected to slow, with the forecast 0.1% annualised growth rate until the end of 2024 being well below the historical 2.3% 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 19% annually. Factoring in the forecast slowdown in growth, it seems obvious that Shanghai Mechanical & Electrical IndustryLtd is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shanghai Mechanical & Electrical IndustryLtd. On the negative side, they also downgraded their revenue estimates, and 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Shanghai Mechanical & Electrical IndustryLtd going out as far as 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 Mechanical & Electrical IndustryLtd 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.
