The analysts might have been a bit too bullish on Shenzhen Sunline Tech Co., Ltd. (SZSE:300348), given that the company fell short of expectations when it released its quarterly results last week. Shenzhen Sunline Tech delivered a grave earnings miss, with both revenues (CN¥416m) and statutory earnings per share (CN¥0.01) falling badly short of analyst expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from Shenzhen Sunline Tech's six analysts is for revenues of CN¥2.29b in 2024. This would reflect a sizeable 22% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 108% to CN¥0.11. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.21b and earnings per share (EPS) of CN¥0.16 in 2024. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
There's been no major changes to the price target of CN¥8.90, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Shenzhen Sunline Tech at CN¥11.00 per share, while the most bearish prices it at CN¥7.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Shenzhen Sunline Tech's rate of growth is expected to accelerate meaningfully, with the forecast 50% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shenzhen Sunline Tech is expected to grow much faster than its industry.
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. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at CN¥8.90, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Shenzhen Sunline Tech. Long-term earnings power is much more important than next year's profits. We have forecasts for Shenzhen Sunline Tech 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 Shenzhen Sunline Tech .
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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.
