Today is shaping up negative for Shanghai Pret Composites Co., Ltd. (SZSE:002324) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After this downgrade, Shanghai Pret Composites' four analysts are now forecasting revenues of CN¥12b in 2024. This would be a sizeable 34% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 25% to CN¥0.53. Before this latest update, the analysts had been forecasting revenues of CN¥14b and earnings per share (EPS) of CN¥0.70 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Shanghai Pret Composites' rate of growth is expected to accelerate meaningfully, with the forecast 34% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 20% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shanghai Pret Composites to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Shanghai Pret Composites, and a few readers might choose to steer clear of the stock.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on Shanghai Pret Composites' mountain of debt, which could lead to some belt tightening for shareholders. See why we're concerned about Shanghai Pret Composites' balance sheet by visiting our risks dashboard for free on our platform here.
You can also see our analysis of Shanghai Pret Composites' Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.