The analysts might have been a bit too bullish on Hengli Petrochemical Co.,Ltd. (SHSE:600346), given that the company fell short of expectations when it released its quarterly results last week. Results showed a clear earnings miss, with CN¥65b revenue coming in 3.8% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.16 missed the mark badly, arriving some 60% below what was expected. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Hengli PetrochemicalLtd's twelve analysts are now forecasting revenues of CN¥259.6b in 2025. This would be a notable 8.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 66% to CN¥1.49. Before this earnings report, the analysts had been forecasting revenues of CN¥261.2b and earnings per share (EPS) of CN¥1.55 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥17.42, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Hengli PetrochemicalLtd at CN¥21.10 per share, while the most bearish prices it at CN¥15.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. It's pretty clear that there is an expectation that Hengli PetrochemicalLtd's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 6.7% growth on an annualised basis. This is compared to a historical growth rate of 16% 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 15% 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 Hengli PetrochemicalLtd.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hengli PetrochemicalLtd. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hengli PetrochemicalLtd's revenue is expected to perform worse than the wider industry. The consensus price target held steady at CN¥17.42, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Hengli PetrochemicalLtd analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Hengli PetrochemicalLtd (1 can't be ignored) 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.
