Last week, you might have seen that Poly Developments and Holdings Group Co., Ltd. (SHSE:600048) released its quarterly result to the market. The early response was not positive, with shares down 3.0% to CN¥7.96 in the past week. It looks like a credible result overall - although revenues of CN¥90b were what the analysts expected, Poly Developments and Holdings Group surprised by delivering a (statutory) profit of CN¥0.43 per share, an impressive 65% above what was forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following the recent earnings report, the consensus from 19 analysts covering Poly Developments and Holdings Group is for revenues of CN¥334.1b in 2024. This implies a noticeable 4.3% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 57% to CN¥0.96. In the lead-up to this report, the analysts had been modelling revenues of CN¥334.2b and earnings per share (EPS) of CN¥1.01 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target fell 14% to CN¥9.45, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Poly Developments and Holdings Group analyst has a price target of CN¥10.80 per share, while the most pessimistic values it at CN¥8.07. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 8.4% annualised decline to the end of 2024. That is a notable change from historical growth of 9.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Poly Developments and Holdings Group is expected to lag 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 Poly Developments and Holdings Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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 in mind, we wouldn't be too quick to come to a conclusion on Poly Developments and Holdings Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Poly Developments and Holdings Group going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Poly Developments and Holdings Group (at least 1 which is significant) , and understanding these should be part of your investment process.

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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.