Hengli Petrochemical Co.,Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

As you might know, Hengli Petrochemical Co.,Ltd. (SHSE:600346) recently reported its annual numbers. It was not a great result overall. While revenues of CN¥235b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit CN¥0.98 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Hengli PetrochemicalLtd

Following the latest results, Hengli PetrochemicalLtd's 14 analysts are now forecasting revenues of CN¥258.9b in 2024. This would be a notable 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 50% to CN¥1.47. Before this earnings report, the analysts had been forecasting revenues of CN¥253.3b and earnings per share (EPS) of CN¥1.47 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.

It may not be a surprise to see thatthe analysts have reconfirmed their price target of CN¥17.15, implying that the uplift in revenue is not expected to greatly contribute to Hengli PetrochemicalLtd's valuation in the near term. 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. Currently, the most bullish analyst values Hengli PetrochemicalLtd at CN¥21.80 per share, while the most bearish prices it at CN¥12.80. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 Hengli PetrochemicalLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 23% 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 16% per year. Factoring in the forecast slowdown in growth, it seems obvious that Hengli PetrochemicalLtd is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Hengli PetrochemicalLtd analysts - 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 2 warning signs with Hengli PetrochemicalLtd (at least 1 which is potentially serious) , and understanding them 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.