Guizhou Zhenhua E-chem Inc. (SHSE:688707) Analysts Just Trimmed Their Revenue Forecasts By 45%

One thing we could say about the analysts on Guizhou Zhenhua E-chem Inc. (SHSE:688707) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the twin analysts covering Guizhou Zhenhua E-chem, is for revenues of CN¥1.8b in 2024, which would reflect a substantial 61% reduction in Guizhou Zhenhua E-chem's sales over the past 12 months. Per-share losses are expected to explode, reaching CN¥1.22 per share. However, before this estimates update, the consensus had been expecting revenues of CN¥3.2b and CN¥1.14 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Guizhou Zhenhua E-chem

There was no major change to the consensus price target of CN¥22.60, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 85% annualised revenue 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 note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Guizhou Zhenhua E-chem. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Guizhou Zhenhua E-chem going forwards.

That said, the analysts might have good reason to be negative on Guizhou Zhenhua E-chem, given dilutive stock issuance over the past year. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

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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.