Hangcha Group Co., Ltd Recorded A 10% Miss On Revenue: Analysts Are Revisiting Their Models

Shareholders might have noticed that Hangcha Group Co., Ltd (SHSE:603298) filed its quarterly result this time last week. The early response was not positive, with shares down 7.2% to CN¥29.50 in the past week. Revenues were CN¥4.2b, 10% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of CN¥1.84 being in line with what the analysts forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Hangcha Group

Taking into account the latest results, the most recent consensus for Hangcha Group from seven analysts is for revenues of CN¥19.7b in 2024. If met, it would imply a notable 19% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 16% to CN¥2.24. In the lead-up to this report, the analysts had been modelling revenues of CN¥18.7b and earnings per share (EPS) of CN¥2.03 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a solid gain to earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥35.66, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Hangcha Group, with the most bullish analyst valuing it at CN¥41.58 and the most bearish at CN¥28.40 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hangcha Group shareholders.

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. The analysts are definitely expecting Hangcha Group's growth to accelerate, with the forecast 26% annualised growth to the end of 2024 ranking favourably alongside historical growth of 14% 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 17% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hangcha Group is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Hangcha Group's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at CN¥35.66, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Hangcha Group 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 1 warning sign with Hangcha Group , and understanding it should be part of your investment process.

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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.