A week ago, Tonghua Dongbao Pharmaceutical Co., Ltd. (SHSE:600867) came out with a strong set of annual numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 2.2% to hit CN¥3.1b. Statutory earnings per share (EPS) came in at CN¥0.59, some 9.3% above whatthe analysts had 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. 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 six analysts covering Tonghua Dongbao Pharmaceutical are now predicting revenues of CN¥3.42b in 2024. If met, this would reflect a decent 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 10% to CN¥0.65. Before this earnings report, the analysts had been forecasting revenues of CN¥3.48b and earnings per share (EPS) of CN¥0.66 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of CN¥15.27, showing that the business is executing well and in line with expectations. 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 Tonghua Dongbao Pharmaceutical analyst has a price target of CN¥17.00 per share, while the most pessimistic values it at CN¥14.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. It's clear from the latest estimates that Tonghua Dongbao Pharmaceutical's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.4% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Tonghua Dongbao Pharmaceutical is expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Tonghua Dongbao Pharmaceutical going out to 2026, and you can see them free on our platform here.
Even so, be aware that Tonghua Dongbao Pharmaceutical is showing 2 warning signs in our investment analysis , you should know about...
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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.