China National Chemical Engineering Co., Ltd Just Missed Revenue By 14%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that China National Chemical Engineering Co., Ltd (SHSE:601117) released its second-quarter result to the market. The early response was not positive, with shares down 4.8% to CN¥6.54 in the past week. Revenues were CN¥46b, 14% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of CN¥0.89 being in line with what the analysts anticipated. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for China National Chemical Engineering

Following the latest results, China National Chemical Engineering's ten analysts are now forecasting revenues of CN¥194.6b in 2024. This would be a notable 9.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 9.1% to CN¥0.95. In the lead-up to this report, the analysts had been modelling revenues of CN¥199.2b and earnings per share (EPS) of CN¥0.99 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the CN¥10.49 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values China National Chemical Engineering at CN¥12.80 per share, while the most bearish prices it at CN¥7.74. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 China National Chemical Engineering's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 15% per annum 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 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that China National Chemical Engineering is expected to grow much faster than its 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. 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.

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 China National Chemical Engineering going out to 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 China National Chemical Engineering 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.