Shanghai Mechanical & Electrical Industry Co.,Ltd. Just Missed Revenue By 7.6%: Here's What Analysts Think Will Happen Next

Shanghai Mechanical & Electrical Industry Co.,Ltd. (SHSE:600835) shareholders are probably feeling a little disappointed, since its shares fell 6.4% to CN¥11.95 in the week after its latest annual results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥22b, statutory earnings were in line with expectations, at CN¥0.98 per share. The analyst 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. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Shanghai Mechanical & Electrical IndustryLtd

Taking into account the latest results, Shanghai Mechanical & Electrical IndustryLtd's sole analyst currently expect revenues in 2024 to be CN¥22.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 2.3% to CN¥1.00. Before this earnings report, the analyst had been forecasting revenues of CN¥25.4b and earnings per share (EPS) of CN¥1.19 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a real cut to earnings per share numbers as well.

The analyst made no major changes to their price target of CN¥14.00, suggesting the downgrades are not expected to have a long-term impact on Shanghai Mechanical & Electrical IndustryLtd's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Shanghai Mechanical & Electrical IndustryLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.1% growth on an annualised basis. This is compared to a historical growth rate of 2.3% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 19% per year. Factoring in the forecast slowdown in growth, it seems obvious that Shanghai Mechanical & Electrical IndustryLtd is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥14.00, with the latest estimates not enough to have an impact on their price target.

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

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Shanghai Mechanical & Electrical IndustryLtd that you should be aware 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.