Shareholders might have noticed that Wanhua Chemical Group Co., Ltd. (SHSE:600309) filed its quarterly result this time last week. The early response was not positive, with shares down 3.7% to CN¥70.80 in the past week. It was not a great result overall. While revenues of CN¥51b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 18% to hit CN¥1.28 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 consensus forecast from Wanhua Chemical Group's 18 analysts is for revenues of CN¥199.0b in 2024. This reflects a reasonable 7.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 3.9% to CN¥5.43. Before this earnings report, the analysts had been forecasting revenues of CN¥198.6b and earnings per share (EPS) of CN¥6.08 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥101, 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¥116 and the most bearish at CN¥64.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. 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 23% 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) 15% annually. Factoring in the forecast slowdown in growth, it looks like Wanhua Chemical Group is forecast to grow at about the same rate as 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 Wanhua Chemical Group. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at CN¥101, with the latest estimates not enough to have an impact on their price targets.
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 forecasts for Wanhua Chemical Group going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Wanhua Chemical Group has 2 warning signs we think you should be aware of.
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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.