As you might know, Wanhua Chemical Group Co., Ltd. (SHSE:600309) last week released its latest quarterly, and things did not turn out so great for shareholders. Results showed a clear earnings miss, with CN¥46b revenue coming in 9.2% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥1.32 missed the mark badly, arriving some 28% below what was expected. 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 most recent consensus for Wanhua Chemical Group from 21 analysts is for revenues of CN¥200.3b in 2024. If met, it would imply a notable 12% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to ascend 17% to CN¥6.28. Before this earnings report, the analysts had been forecasting revenues of CN¥199.4b and earnings per share (EPS) of CN¥6.50 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥108, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Wanhua Chemical Group, with the most bullish analyst valuing it at CN¥125 and the most bearish at CN¥95.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Wanhua Chemical Group is an easy business to forecast or the the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Wanhua Chemical Group's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% annually. So it's pretty clear that, while Wanhua Chemical Group's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 in mind, we wouldn't be too quick to come to a conclusion on Wanhua Chemical Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Wanhua Chemical Group analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Wanhua Chemical Group (1 is potentially serious!) that you should be aware of.

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