Analysts Have Lowered Expectations For Shede Spirits Co., Ltd. (SHSE:600702) After Its Latest Results

Shareholders might have noticed that Shede Spirits Co., Ltd. (SHSE:600702) filed its annual result this time last week. The early response was not positive, with shares down 2.5% to CN¥82.50 in the past week. Revenues of CN¥7.1b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥5.35, missing estimates by 3.2%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Shede Spirits

Taking into account the latest results, the most recent consensus for Shede Spirits from 13 analysts is for revenues of CN¥8.12b in 2024. If met, it would imply a solid 15% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to grow 15% to CN¥6.11. In the lead-up to this report, the analysts had been modelling revenues of CN¥8.61b and earnings per share (EPS) of CN¥6.85 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The consensus price target fell 12% to CN¥136, with the weaker earnings outlook clearly leading valuation estimates. 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 Shede Spirits, with the most bullish analyst valuing it at CN¥166 and the most bearish at CN¥110 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 pretty clear that there is an expectation that Shede Spirits' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% annually. Factoring in the forecast slowdown in growth, it looks like Shede Spirits is forecast 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 downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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 Shede Spirits' 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. At Simply Wall St, we have a full range of analyst estimates for Shede Spirits going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for Shede Spirits (1 makes us a bit uncomfortable!) that you need to be mindful 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.