Last week saw the newest first-quarter earnings release from Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. (SZSE:002304), an important milestone in the company's journey to build a stronger business. It looks like the results were a bit of a negative overall. While revenues of CN¥16b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.2% to hit CN¥4.02 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 Jiangsu Yanghe Brewery after the latest results.
Following the latest results, Jiangsu Yanghe Brewery's 20 analysts are now forecasting revenues of CN¥36.8b in 2024. This would be a credible 7.1% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 7.6% to CN¥7.36. Before this earnings report, the analysts had been forecasting revenues of CN¥39.0b and earnings per share (EPS) of CN¥8.08 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
It'll come as no surprise then, to learn that the analysts have cut their price target 5.6% to CN¥136. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Jiangsu Yanghe Brewery analyst has a price target of CN¥185 per share, while the most pessimistic values it at CN¥90.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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 can infer from the latest estimates that forecasts expect a continuation of Jiangsu Yanghe Brewery'shistorical trends, as the 9.5% annualised revenue growth to the end of 2024 is roughly in line with the 9.3% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So although Jiangsu Yanghe Brewery is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Jiangsu Yanghe Brewery. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Jiangsu Yanghe Brewery's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Jiangsu Yanghe Brewery analysts - going out to 2026, and you can see them free on our platform here.
We also provide an overview of the Jiangsu Yanghe Brewery Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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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.
