Last week saw the newest yearly earnings release from ANTA Sports Products Limited (HKG:2020), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of CN¥62b were in line with what the analysts predicted, ANTA Sports Products surprised by delivering a statutory profit of CN¥3.60 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
SEHK:2020 Earnings and Revenue Growth March 29th 2024
Taking into account the latest results, the current consensus from ANTA Sports Products' 37 analysts is for revenues of CN¥70.9b in 2024. This would reflect a notable 14% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to soar 20% to CN¥4.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥71.1b and earnings per share (EPS) of CN¥4.20 in 2024. So the consensus seems to have become somewhat more optimistic on ANTA Sports Products' earnings potential following these results.
There's been no major changes to the consensus price target of HK$112, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on ANTA Sports Products, with the most bullish analyst valuing it at HK$144 and the most bearish at HK$84.03 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that ANTA Sports Products' revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2024 being well below the historical 18% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% annually. Even after the forecast slowdown in growth, it seems obvious that ANTA Sports Products is also expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ANTA Sports Products' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for ANTA Sports Products going out to 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for ANTA Sports Products that you need to be mindful of.
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