Investors in Hangzhou Sunrise Technology Co.,Ltd. (SZSE:300360) had a good week, as its shares rose 6.0% to close at CN¥15.46 following the release of its yearly results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥1.8b, statutory earnings beat expectations 7.1%, with Hangzhou Sunrise TechnologyLtd reporting profits of CN¥1.20 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Hangzhou Sunrise TechnologyLtd from five analysts is for revenues of CN¥2.17b in 2024. If met, it would imply a sizeable 23% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 2.3% to CN¥1.22. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.57b and earnings per share (EPS) of CN¥1.41 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a substantial drop in earnings per share numbers as well.
Despite the cuts to forecast earnings, there was no real change to the CN¥18.70 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Hangzhou Sunrise TechnologyLtd analyst has a price target of CN¥21.24 per share, while the most pessimistic values it at CN¥15.85. This is a very narrow spread of estimates, implying either that Hangzhou Sunrise TechnologyLtd is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Hangzhou Sunrise TechnologyLtd's rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 17% 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 18% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hangzhou Sunrise TechnologyLtd to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hangzhou Sunrise TechnologyLtd. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.
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 estimates - from multiple Hangzhou Sunrise TechnologyLtd analysts - going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Hangzhou Sunrise TechnologyLtd , and understanding this should be part of your investment process.
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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.