Sany Heavy Industry Co.,Ltd Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

The half-year results for Sany Heavy Industry Co.,Ltd (SHSE:600031) were released last week, making it a good time to revisit its performance. Revenues of CN¥39b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of CN¥0.23 an impressive 24% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Sany Heavy IndustryLtd

Taking into account the latest results, the consensus forecast from Sany Heavy IndustryLtd's 18 analysts is for revenues of CN¥77.9b in 2024. This reflects a reasonable 6.5% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 28% to CN¥0.71. In the lead-up to this report, the analysts had been modelling revenues of CN¥79.4b and earnings per share (EPS) of CN¥0.70 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of CN¥16.89, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Sany Heavy IndustryLtd at CN¥23.00 per share, while the most bearish prices it at CN¥11.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. For example, we noticed that Sany Heavy IndustryLtd's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 13% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 1.9% 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 16% annually for the foreseeable future. Although Sany Heavy IndustryLtd's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Sany Heavy IndustryLtd's revenue is expected to 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Sany Heavy IndustryLtd. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Sany Heavy IndustryLtd analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Sany Heavy IndustryLtd , and understanding these should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.