Earnings Update: Huali Industrial Group Company Limited (SZSE:300979) Just Reported Its Yearly Results And Analysts Are Updating Their Forecasts

Huali Industrial Group Company Limited (SZSE:300979) shareholders are probably feeling a little disappointed, since its shares fell 3.6% to CN¥65.23 in the week after its latest annual results. Results were roughly in line with estimates, with revenues of CN¥24b and statutory earnings per share of CN¥3.29. 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 Huali Industrial Group after the latest results.

View our latest analysis for Huali Industrial Group

After the latest results, the eleven analysts covering Huali Industrial Group are now predicting revenues of CN¥27.4b in 2025. If met, this would reflect a meaningful 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 12% to CN¥3.70. Before this earnings report, the analysts had been forecasting revenues of CN¥27.6b and earnings per share (EPS) of CN¥3.84 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥77.28, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Huali Industrial Group, with the most bullish analyst valuing it at CN¥82.00 and the most bearish at CN¥65.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Huali Industrial Group is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's clear from the latest estimates that Huali Industrial Group's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Huali Industrial Group is expected to grow at about the same rate as 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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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

Even so, be aware that Huali Industrial Group is showing 1 warning sign in our investment analysis , you should know about...

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.