Pou Sheng International (Holdings) Limited (HKG:3813) last week reported its latest half-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Pou Sheng International (Holdings) reported in line with analyst predictions, delivering revenues of CN¥10.0b and statutory earnings per share of CN¥0.095, suggesting the business is executing well and in line with its plan. 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, Pou Sheng International (Holdings)'s six analysts currently expect revenues in 2024 to be CN¥18.7b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 7.5% to CN¥0.11. In the lead-up to this report, the analysts had been modelling revenues of CN¥18.9b and earnings per share (EPS) of CN¥0.12 in 2024. 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.

The consensus price target held steady at HK$1.17, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Pou Sheng International (Holdings) at HK$2.79 per share, while the most bearish prices it at HK$0.72. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pou Sheng International (Holdings)'s past performance and to peers in the same industry. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 8.6% annually. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually. So it's pretty clear that, although revenues are improving, Pou Sheng International (Holdings) is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Pou Sheng International (Holdings). Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Pou Sheng International (Holdings)'s revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 forecasts for Pou Sheng International (Holdings) going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Pou Sheng International (Holdings) that you need to take into consideration.

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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.