Fujian Longking Co., Ltd. Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

It's shaping up to be a tough period for Fujian Longking Co., Ltd. (SHSE:600388), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. Earnings missed expectations fairly severely, with revenues arriving 20% shy of expectations at just CN¥10b. Per-share statutory earnings were CN¥0.77, missing analyst predictions by 16%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Fujian Longking after the latest results.

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Taking into account the latest results, the consensus forecast from Fujian Longking's four analysts is for revenues of CN¥11.6b in 2025. This reflects a solid 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 37% to CN¥0.90. Before this earnings report, the analysts had been forecasting revenues of CN¥14.6b and earnings per share (EPS) of CN¥1.17 in 2025. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

View our latest analysis for Fujian Longking

The analysts made no major changes to their price target of CN¥16.97, suggesting the downgrades are not expected to have a long-term impact on Fujian Longking's valuation. 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 Fujian Longking, with the most bullish analyst valuing it at CN¥18.94 and the most bearish at CN¥15.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. The analysts are definitely expecting Fujian Longking's growth to accelerate, with the forecast 16% annualised growth to the end of 2025 ranking favourably alongside historical growth of 0.6% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 16% per year. Fujian Longking is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at CN¥16.97, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Fujian Longking. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Fujian Longking analysts - going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Fujian Longking that you need to be mindful of.

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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.