Earnings Update: Hunan New Wellful Co.,Ltd. (SHSE:600975) Just Reported And Analysts Are Trimming Their Forecasts

As you might know, Hunan New Wellful Co.,Ltd. (SHSE:600975) last week released its latest annual, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at CN¥5.6b, but statutory earnings fell catastrophically short, with a loss of CN¥1.03 some 27% larger than what the analysts had predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Hunan New WellfulLtd

Taking into account the latest results, the consensus forecast from Hunan New WellfulLtd's four analysts is for revenues of CN¥8.54b in 2024. This reflects a major 52% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Hunan New WellfulLtd forecast to report a statutory profit of CN¥0.09 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥9.78b and earnings per share (EPS) of CN¥0.10 in 2024. Indeed, we can see that the analysts are a lot more bearish about Hunan New WellfulLtd's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 17% to CN¥11.20, with the weaker earnings outlook clearly leading valuation estimates. 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. The most optimistic Hunan New WellfulLtd analyst has a price target of CN¥14.00 per share, while the most pessimistic values it at CN¥9.59. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hunan New WellfulLtd shareholders.

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 Hunan New WellfulLtd's rate of growth is expected to accelerate meaningfully, with the forecast 52% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 24% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Hunan New WellfulLtd is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hunan New WellfulLtd. They also downgraded Hunan New WellfulLtd's revenue estimates, but industry data suggests that it is expected to 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 Hunan New WellfulLtd. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Hunan New WellfulLtd going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Hunan New WellfulLtd , and understanding it should be part of your investment process.

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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.