Shenzhen Tagen Group Co., Ltd. (SZSE:000090) just released its latest yearly report and things are not looking great. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥27b, statutory earnings missed forecasts by an incredible 21%, coming in at just CN¥0.74 per share. 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.

Taking into account the latest results, the most recent consensus for Shenzhen Tagen Group from three analysts is for revenues of CN¥27.8b in 2024. If met, it would imply an okay 2.9% increase on its revenue over the past 12 months. Statutory earnings per share are expected to shrink 8.2% to CN¥0.74 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥33.4b and earnings per share (EPS) of CN¥1.01 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shenzhen Tagen Group's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the CN¥6.89 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Shenzhen Tagen Group analyst has a price target of CN¥8.50 per share, while the most pessimistic values it at CN¥5.28. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Shenzhen Tagen Group shareholders.

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. We would highlight that Shenzhen Tagen Group's revenue growth is expected to slow, with the forecast 2.9% annualised growth rate until the end of 2024 being well below the historical 20% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shenzhen Tagen Group.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 forecasts for Shenzhen Tagen Group going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Shenzhen Tagen Group's balance sheet, and whether we think Shenzhen Tagen Group is carrying too much debt, for free on our platform here.

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