Shareholders of Haidilao International Holding Ltd. (HKG:6862) will be pleased this week, given that the stock price is up 11% to HK$13.12 following its latest half-year results. The result was positive overall - although revenues of CN¥21b were in line with what the analysts predicted, Haidilao International Holding surprised by delivering a statutory profit of CN¥0.38 per share, modestly greater than expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Haidilao International Holding's 32 analysts is for revenues of CN¥45.7b in 2024. This would reflect an okay 3.7% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to climb 12% to CN¥0.86. In the lead-up to this report, the analysts had been modelling revenues of CN¥46.3b and earnings per share (EPS) of CN¥0.90 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 HK$17.42, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Haidilao International Holding analyst has a price target of HK$26.64 per share, while the most pessimistic values it at HK$12.46. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Haidilao International Holding's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Haidilao International Holding's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.5% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Haidilao International Holding.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Haidilao International Holding's revenue is expected to 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.
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 Haidilao International Holding analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Haidilao International Holding that 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.