The analysts might have been a bit too bullish on Ningbo Haitian Precision Machinery Co.,Ltd. (SHSE:601882), given that the company fell short of expectations when it released its full-year results last week. Ningbo Haitian Precision MachineryLtd missed analyst forecasts, with revenues of CN¥3.3b and statutory earnings per share (EPS) of CN¥1.17, falling short by 8.8% and 3.4% respectively. The analysts 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Ningbo Haitian Precision MachineryLtd's six analysts is for revenues of CN¥3.87b in 2024. This would reflect a meaningful 17% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to expand 20% to CN¥1.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥4.36b and earnings per share (EPS) of CN¥1.46 in 2024. It looks like sentiment has fallen somewhat in the aftermath of these results, with a real cut to revenue estimates and a minor downgrade to earnings per share numbers as well.
The consensus price target fell 8.5% to CN¥33.38, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Ningbo Haitian Precision MachineryLtd analyst has a price target of CN¥35.50 per share, while the most pessimistic values it at CN¥31.25. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Ningbo Haitian Precision MachineryLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 25% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 19% annually. Factoring in the forecast slowdown in growth, it looks like Ningbo Haitian Precision MachineryLtd is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Ningbo Haitian Precision MachineryLtd 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 1 warning sign for Ningbo Haitian Precision MachineryLtd 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.
