Earnings Miss: Hubei Xingfa Chemicals Group Co., Ltd. Missed EPS By 15% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Hubei Xingfa Chemicals Group Co., Ltd. (SHSE:600141), given that the company fell short of expectations when it released its annual results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CN¥28b, statutory earnings missed forecasts by 15%, coming in at just CN¥1.40 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the most recent consensus for Hubei Xingfa Chemicals Group from four analysts is for revenues of CN¥30.1b in 2025. If met, it would imply an okay 6.1% increase on its revenue over the past 12 months. Per-share earnings are expected to grow 18% to CN¥1.71. In the lead-up to this report, the analysts had been modelling revenues of CN¥31.6b and earnings per share (EPS) of CN¥1.94 in 2025. 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.

See our latest analysis for Hubei Xingfa Chemicals Group

The analysts made no major changes to their price target of CN¥27.28, suggesting the downgrades are not expected to have a long-term impact on Hubei Xingfa Chemicals Group'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. There are some variant perceptions on Hubei Xingfa Chemicals Group, with the most bullish analyst valuing it at CN¥28.00 and the most bearish at CN¥26.85 per share. This is a very narrow spread of estimates, implying either that Hubei Xingfa Chemicals Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Hubei Xingfa Chemicals Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it seems obvious that Hubei Xingfa Chemicals Group is also expected to grow slower than other industry participants.

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. 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. 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.

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 estimates - from multiple Hubei Xingfa Chemicals Group analysts - going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for Hubei Xingfa Chemicals Group (1 makes us a bit uncomfortable!) that we have uncovered.

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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.