Earnings Update: Shanghai Rongtai Health Technology Corporation Limited (SHSE:603579) Just Reported Its Annual Results And Analysts Are Updating Their Forecasts

Shareholders of Shanghai Rongtai Health Technology Corporation Limited (SHSE:603579) will be pleased this week, given that the stock price is up 15% to CN¥22.10 following its latest annual results. It was a credible result overall, with revenues of CN¥1.9b and statutory earnings per share of CN¥1.47 both in line with analyst estimates, showing that Shanghai Rongtai Health Technology is executing in line with expectations. 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.

Check out our latest analysis for Shanghai Rongtai Health Technology

Taking into account the latest results, the consensus forecast from Shanghai Rongtai Health Technology's three analysts is for revenues of CN¥2.07b in 2024. This reflects a notable 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 15% to CN¥1.73. Before this earnings report, the analysts had been forecasting revenues of CN¥2.15b and earnings per share (EPS) of CN¥1.78 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of CN¥26.03, suggesting the downgrades are not expected to have a long-term impact on Shanghai Rongtai Health Technology'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. Currently, the most bullish analyst values Shanghai Rongtai Health Technology at CN¥26.05 per share, while the most bearish prices it at CN¥26.00. This is a very narrow spread of estimates, implying either that Shanghai Rongtai Health Technology is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. One thing stands out from these estimates, which is that Shanghai Rongtai Health Technology is forecast to grow faster in the future than it has in the past, with revenues expected to display 12% annualised growth until the end of 2024. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 16% annually for the foreseeable future. Although Shanghai Rongtai Health Technology's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shanghai Rongtai Health Technology. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥26.03, 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. We have forecasts for Shanghai Rongtai Health Technology going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Shanghai Rongtai Health Technology that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.