It's been a good week for Shandong Minhe Animal Husbandry Co., Ltd. (SZSE:002234) shareholders, because the company has just released its latest yearly results, and the shares gained 4.2% to CN¥10.93. It looks like a pretty bad result, given that revenues fell 13% short of analyst estimates at CN¥2.1b, and the company reported a statutory loss of CN¥1.11 per share instead of the profit that the analysts had been forecasting. 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. 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 most recent consensus for Shandong Minhe Animal Husbandry from two analysts is for revenues of CN¥3.03b in 2024. If met, it would imply a sizeable 46% increase on its revenue over the past 12 months. Shandong Minhe Animal Husbandry is also expected to turn profitable, with statutory earnings of CN¥0.86 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.11b and earnings per share (EPS) of CN¥1.88 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.

The consensus price target fell 30% to CN¥12.39, with the weaker earnings outlook clearly leading valuation estimates.

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. One thing stands out from these estimates, which is that Shandong Minhe Animal Husbandry is forecast to grow faster in the future than it has in the past, with revenues expected to display 46% annualised growth until the end of 2024. If achieved, this would be a much better result than the 8.8% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. So it looks like Shandong Minhe Animal Husbandry 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 Shandong Minhe Animal Husbandry. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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 Shandong Minhe Animal Husbandry. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

You can also view our analysis of Shandong Minhe Animal Husbandry's balance sheet, and whether we think Shandong Minhe Animal Husbandry is carrying too much debt, for free on our platform here.

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