Shanghai Daimay Automotive Interior Co., Ltd (SHSE:603730) Just Reported Earnings, And Analysts Cut Their Target Price

It's been a good week for Shanghai Daimay Automotive Interior Co., Ltd (SHSE:603730) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.8% to CN¥12.78. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥1.6b, statutory earnings were in line with expectations, at CN¥0.51 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Shanghai Daimay Automotive Interior

Following the latest results, Shanghai Daimay Automotive Interior's four analysts are now forecasting revenues of CN¥7.28b in 2024. This would be a solid 20% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 33% to CN¥0.72. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥7.63b and earnings per share (EPS) of CN¥0.78 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The consensus price target fell 17% to CN¥18.54, with the weaker earnings outlook clearly leading valuation estimates. 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. There are some variant perceptions on Shanghai Daimay Automotive Interior, with the most bullish analyst valuing it at CN¥22.00 and the most bearish at CN¥15.29 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. It's clear from the latest estimates that Shanghai Daimay Automotive Interior's rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.2% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shanghai Daimay Automotive Interior to grow faster than the wider industry.

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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Shanghai Daimay Automotive Interior 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 1 warning sign for Shanghai Daimay Automotive Interior 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.