Earnings Update: Ginlong Technologies Co., Ltd. (SZSE:300763) Just Reported And Analysts Are Trimming Their Forecasts

The first-quarter results for Ginlong Technologies Co., Ltd. (SZSE:300763) were released last week, making it a good time to revisit its performance. It was a workmanlike result, with revenues of CN¥1.4b coming in 3.2% ahead of expectations, and statutory earnings per share of CN¥1.95, in line with analyst appraisals. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Ginlong Technologies

After the latest results, the eight analysts covering Ginlong Technologies are now predicting revenues of CN¥6.93b in 2024. If met, this would reflect a decent 19% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 84% to CN¥2.19. Before this earnings report, the analysts had been forecasting revenues of CN¥8.19b and earnings per share (EPS) of CN¥3.14 in 2024. Indeed, we can see that the analysts are a lot more bearish about Ginlong Technologies' prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 8.5% to CN¥62.79, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Ginlong Technologies, with the most bullish analyst valuing it at CN¥75.00 and the most bearish at CN¥52.96 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Ginlong Technologies' revenue growth is expected to slow, with the forecast 26% annualised growth rate until the end of 2024 being well below the historical 38% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. So it's pretty clear that, while Ginlong Technologies' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Ginlong Technologies. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ginlong Technologies analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Ginlong Technologies (2 make us uncomfortable!) 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.