Xiamen C&D Inc. (SHSE:600153) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues missed the mark, coming in 12% below forecasts, at CN¥764b. Statutory profits were better overall though, with per-share profits of CN¥4.29 being a notable 17% above what the analysts were modelling. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Xiamen C&D's four analysts are now forecasting revenues of CN¥802.3b in 2024. This would be a modest 5.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to tumble 46% to CN¥2.34 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥943.6b and earnings per share (EPS) of CN¥2.40 in 2024. Indeed, we can see that sentiment has declined measurably after results came out, with a real cut to revenue estimates and a minor downgrade to EPS estimates to boot.
The analysts made no major changes to their price target of CN¥14.60, suggesting the downgrades are not expected to have a long-term impact on Xiamen C&D'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. The most optimistic Xiamen C&D analyst has a price target of CN¥16.65 per share, while the most pessimistic values it at CN¥12.55. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Xiamen C&D's revenue growth is expected to slow, with the forecast 5.1% annualised growth rate until the end of 2024 being well below the historical 25% 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 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that Xiamen C&D is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Xiamen C&D. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥14.60, with the latest estimates not enough to have an impact on their price targets.
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 Xiamen C&D going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Xiamen C&D you should be aware of, and 1 of them is potentially serious.
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