A week ago, Shengyi Technology Co.,Ltd. (SHSE:600183) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of CN¥5.2b arriving 5.0% ahead of forecasts. Statutory earnings per share (EPS) were CN¥0.22, 8.9% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the twelve analysts covering Shengyi TechnologyLtd are now predicting revenues of CN¥20.0b in 2024. If met, this would reflect a solid 9.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 40% to CN¥0.89. Before this earnings report, the analysts had been forecasting revenues of CN¥19.5b and earnings per share (EPS) of CN¥0.80 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of CN¥23.17, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Shengyi TechnologyLtd at CN¥29.00 per share, while the most bearish prices it at CN¥14.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Shengyi TechnologyLtd's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. Shengyi TechnologyLtd is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Shengyi TechnologyLtd's earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Shengyi TechnologyLtd will grow in line with the overall 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.
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 Shengyi TechnologyLtd going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Shengyi TechnologyLtd that you should be aware of.
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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.
