The analysts covering China Pacific Insurance (Group) Co., Ltd. (SHSE:601601) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 4.5% to CN¥23.61 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
After this downgrade, China Pacific Insurance (Group)'s eleven analysts are now forecasting revenues of CN¥307b in 2024. This would be a notable 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 13% to CN¥3.21. Before this latest update, the analysts had been forecasting revenues of CN¥399b and earnings per share (EPS) of CN¥3.22 in 2024. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a pretty serious reduction to revenues and reconfirming their earnings per share estimates.
The average price target was steady at CN¥27.99 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings.
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. For example, we noticed that China Pacific Insurance (Group)'s rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 11% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 0.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 1.4% annually. Not only are China Pacific Insurance (Group)'s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of China Pacific Insurance (Group) going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for China Pacific Insurance (Group) going out to 2026, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.