It's shaping up to be a tough period for Guangzhou Tinci Materials Technology Co., Ltd. (SZSE:002709), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. Guangzhou Tinci Materials Technology missed earnings this time around, with CN¥15b revenue coming in 3.8% below what the analysts had modelled. Statutory earnings per share (EPS) of CN¥1.00 also fell short of expectations by 18%. 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.
After the latest results, the 13 analysts covering Guangzhou Tinci Materials Technology are now predicting revenues of CN¥16.3b in 2024. If met, this would reflect a reasonable 5.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to descend 17% to CN¥0.82 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥20.3b and earnings per share (EPS) of CN¥1.51 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The consensus price target fell 9.2% to CN¥21.87, with the weaker earnings outlook clearly leading valuation estimates. 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 Guangzhou Tinci Materials Technology analyst has a price target of CN¥34.50 per share, while the most pessimistic values it at CN¥10.00. 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. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Guangzhou Tinci Materials Technology's revenue growth is expected to slow, with the forecast 5.9% annualised growth rate until the end of 2024 being well below the historical 46% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 17% annually. Factoring in the forecast slowdown in growth, it seems obvious that Guangzhou Tinci Materials Technology is also expected to grow slower than other industry participants.
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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 Guangzhou Tinci Materials Technology's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Guangzhou Tinci Materials Technology. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Guangzhou Tinci Materials Technology analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Guangzhou Tinci Materials Technology .
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