Analysts Are Updating Their China National Accord Medicines Corporation Ltd. (SZSE:000028) Estimates After Its Full-Year Results

Shareholders might have noticed that China National Accord Medicines Corporation Ltd. (SZSE:000028) filed its yearly result this time last week. The early response was not positive, with shares down 3.3% to CN¥30.67 in the past week. Revenues of CN¥75b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥2.87, missing estimates by 3.6%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for China National Accord Medicines

Taking into account the latest results, the current consensus from China National Accord Medicines' five analysts is for revenues of CN¥80.3b in 2024. This would reflect a credible 6.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to climb 10% to CN¥3.18. In the lead-up to this report, the analysts had been modelling revenues of CN¥82.4b and earnings per share (EPS) of CN¥3.27 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The analysts made no major changes to their price target of CN¥36.79, suggesting the downgrades are not expected to have a long-term impact on China National Accord Medicines' valuation. 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 China National Accord Medicines, with the most bullish analyst valuing it at CN¥48.00 and the most bearish at CN¥25.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that China National Accord Medicines' revenue growth is expected to slow, with the forecast 6.4% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. Factoring in the forecast slowdown in growth, it seems obvious that China National Accord Medicines is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for China National Accord Medicines. 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¥36.79, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple China National Accord Medicines analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that China National Accord Medicines is showing 1 warning sign in our investment analysis , you should know about...

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