Zijin Mining Group Company Limited (HKG:2899) just released its latest full-year results and things are looking bullish. The company beat expectations with revenues of CN¥136b arriving 9.4% ahead of forecasts. Statutory earnings per share (EPS) were CN¥0.18, 2.9% ahead of estimates. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Zijin Mining Group’s 17 analysts are now forecasting revenues of CN¥141.9b in 2020. This would be a satisfactory 4.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decrease 2.2% to CN¥0.18 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥134.3b and earnings per share (EPS) of CN¥0.21 in 2020. So it’s pretty clear the analysts have mixed opinions on Zijin Mining Group after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.
The analysts also cut Zijin Mining Group’s price target 9.8% to CN¥3.54, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Zijin Mining Group analyst has a price target of CN¥4.39 per share, while the most pessimistic values it at CN¥2.83. 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 Zijin Mining Group shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Zijin Mining Group’s revenue growth is expected to slow, with forecast 4.2% increase next year well below the historical 15%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.6% next year. Even after the forecast slowdown in growth, it seems obvious that Zijin Mining Group is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zijin Mining Group. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 estimates – from multiple Zijin Mining Group analysts – going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example – Zijin Mining Group has 4 warning signs we think you should be aware of.
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