Revenue Beat: Zhejiang Taihua New Material Co.,Ltd Exceeded Revenue Forecasts By 7.5% And Analysts Are Updating Their Estimates

It's been a good week for Zhejiang Taihua New Material Co.,Ltd (SHSE:603055) shareholders, because the company has just released its latest yearly results, and the shares gained 3.2% to CN¥10.37. It was a workmanlike result, with revenues of CN¥5.1b coming in 7.5% ahead of expectations, and statutory earnings per share of CN¥0.50, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Zhejiang Taihua New MaterialLtd

Taking into account the latest results, the consensus forecast from Zhejiang Taihua New MaterialLtd's six analysts is for revenues of CN¥6.14b in 2024. This reflects a major 21% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 37% to CN¥0.74. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥6.03b and earnings per share (EPS) of CN¥0.77 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The average price target fell 10% to CN¥13.37, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 Zhejiang Taihua New MaterialLtd, with the most bullish analyst valuing it at CN¥14.25 and the most bearish at CN¥12.85 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Zhejiang Taihua New MaterialLtd is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Zhejiang Taihua New MaterialLtd's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zhejiang Taihua New MaterialLtd to grow faster than the wider 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Zhejiang Taihua New MaterialLtd's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Zhejiang Taihua New MaterialLtd going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Zhejiang Taihua New MaterialLtd (including 2 which shouldn't be ignored) .

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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.