Zhongfu Shenying Carbon Fiber Co.,Ltd. (SHSE:688295) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥447m, statutory earnings were in line with expectations, at CN¥0.35 per share. 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.
After the latest results, the eight analysts covering Zhongfu Shenying Carbon FiberLtd are now predicting revenues of CN¥2.43b in 2024. If met, this would reflect a huge 25% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 143% to CN¥0.33. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.56b and earnings per share (EPS) of CN¥0.34 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
It'll come as no surprise then, to learn that the analysts have cut their price target 12% to CN¥32.81. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Zhongfu Shenying Carbon FiberLtd, with the most bullish analyst valuing it at CN¥41.00 and the most bearish at CN¥21.35 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Zhongfu Shenying Carbon FiberLtd's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 35% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 12% a year over the past year. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually. So it looks like Zhongfu Shenying Carbon FiberLtd is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhongfu Shenying Carbon FiberLtd. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhongfu Shenying Carbon FiberLtd'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 Zhongfu Shenying Carbon FiberLtd analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Zhongfu Shenying Carbon FiberLtd you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
