Kingfa Sci. & Tech. Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Kingfa Sci. & Tech. Co., Ltd. (SHSE:600143) had a good week, as its shares rose 3.8% to close at CN¥7.46 following the release of its yearly results. Results were mixed, with revenues of CN¥48b exceeding expectations, even as statutory earnings per share (EPS) fell badly short. Earnings were CN¥0.12 per share, -73% short of analyst expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Kingfa Sci. & Tech

Taking into account the latest results, the current consensus from Kingfa Sci. & Tech's dual analysts is for revenues of CN¥50.6b in 2024. This would reflect an okay 5.6% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 263% to CN¥0.43. In the lead-up to this report, the analysts had been modelling revenues of CN¥44.5b and earnings per share (EPS) of CN¥0.72 in 2024. Although revenue sentiment has improved substantially, the analysts have made a pretty serious reduction to per-share earnings estimates, suggesting that the growth is not without cost.

There's been no major changes to the price target of CN¥10.09, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation.

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 Kingfa Sci. & Tech's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.6% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. Factoring in the forecast slowdown in growth, it seems obvious that Kingfa Sci. & Tech 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. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Kingfa Sci. & Tech (1 is concerning) you should be aware 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.