Last week, you might have seen that Shandong Chenming Paper Holdings Limited (SZSE:000488) released its half-yearly result to the market. The early response was not positive, with shares down 3.0% to CN¥3.57 in the past week. Shandong Chenming Paper Holdings beat expectations by 5.3% with revenues of CN¥14b. It also surprised on the earnings front, with an unexpected statutory profit of CN¥0.01 per share a nice improvement on the losses that 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.

Taking into account the latest results, Shandong Chenming Paper Holdings' twin analysts currently expect revenues in 2024 to be CN¥27.4b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 62% to CN¥0.09. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥27.7b and losses of CN¥0.14 per share in 2024. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a considerable decrease in losses per share in particular.

Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 12% to CN¥2.30. It looks likethe analysts have become less optimistic about the overall business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Over the past five years, revenues have declined around 1.3% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 3.6% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Shandong Chenming Paper Holdings to suffer worse than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Shandong Chenming Paper Holdings' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Shandong Chenming Paper Holdings. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Shandong Chenming Paper Holdings going out as far as 2026, and you can see them free on our platform here.

Even so, be aware that Shandong Chenming Paper Holdings is showing 1 warning sign in our investment analysis , you should know about...

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