Investors in COSCO SHIPPING Holdings Co., Ltd. (HKG:1919) had a good week, as its shares rose 4.5% to close at HK$12.46 following the release of its interim results. Revenues were CN¥101b, 15% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of CN¥1.48 being in line with what the analysts forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, COSCO SHIPPING Holdings' ten analysts are now forecasting revenues of CN¥229.5b in 2024. This would be a reasonable 6.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 25% to CN¥3.12. In the lead-up to this report, the analysts had been modelling revenues of CN¥230.0b and earnings per share (EPS) of CN¥2.97 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at HK$12.57, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 COSCO SHIPPING Holdings analyst has a price target of HK$18.03 per share, while the most pessimistic values it at HK$8.41. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting COSCO SHIPPING Holdings' growth to accelerate, with the forecast 14% annualised growth to the end of 2024 ranking favourably alongside historical growth of 7.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.1% per year. So it's clear with the acceleration in growth, COSCO SHIPPING Holdings is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around COSCO SHIPPING Holdings' earnings potential next year. Fortunately, they also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Their estimates also suggest that COSCO SHIPPING Holdings' revenue is expected to perform better than the wider industry. The consensus price target held steady at HK$12.57, 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. At Simply Wall St, we have a full range of analyst estimates for COSCO SHIPPING Holdings going out to 2026, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for COSCO SHIPPING Holdings (1 doesn't sit too well with us!) that we have uncovered.
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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.
