Guizhou Zhenhua E-chem Inc. (SHSE:688707) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Guizhou Zhenhua E-chem Inc. (SHSE:688707) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Statutory results overall were mixed, with revenues coming in 49% lower than the analysts predicted. What's really surprising is that losses of CN¥0.13 per share were 57% smaller than what was predicted. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Guizhou Zhenhua E-chem after the latest results.

See our latest analysis for Guizhou Zhenhua E-chem

Taking into account the latest results, the dual analysts covering Guizhou Zhenhua E-chem provided consensus estimates of CN¥1.77b revenue in 2024, which would reflect a stressful 61% decline over the past 12 months. Losses are forecast to balloon 862% to CN¥1.22 per share. Before this earnings announcement, the analysts had been modelling revenues of CN¥3.23b and losses of CN¥1.14 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target was broadly unchanged at CN¥22.60, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 85% annualised decline to the end of 2024. That is a notable change from historical growth of 8.8% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Guizhou Zhenhua E-chem is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CN¥22.60, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Even so, be aware that Guizhou Zhenhua E-chem is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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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.