Earnings Report: Jiangsu Yangnong Chemical Co., Ltd. Missed Revenue Estimates By 16%

The analysts might have been a bit too bullish on Jiangsu Yangnong Chemical Co., Ltd. (SHSE:600486), given that the company fell short of expectations when it released its annual results last week. Jiangsu Yangnong Chemical reported an earnings miss, with CN¥10b revenues falling 16% short of analyst models, and statutory earnings per share (EPS) of CN¥2.98 also coming in slightly below expectations. 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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After the latest results, the ten analysts covering Jiangsu Yangnong Chemical are now predicting revenues of CN¥11.9b in 2025. If met, this would reflect a decent 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to climb 17% to CN¥3.45. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥14.5b and earnings per share (EPS) of CN¥4.33 in 2025. Indeed, we can see that the analysts are a lot more bearish about Jiangsu Yangnong Chemical's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Jiangsu Yangnong Chemical

It'll come as no surprise then, to learn that the analysts have cut their price target 5.2% to CN¥67.22. 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 Jiangsu Yangnong Chemical analyst has a price target of CN¥75.00 per share, while the most pessimistic values it at CN¥59.94. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Jiangsu Yangnong Chemical is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's clear from the latest estimates that Jiangsu Yangnong Chemical's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 3.9% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Jiangsu Yangnong Chemical is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Jiangsu Yangnong Chemical. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Jiangsu Yangnong Chemical's future valuation.

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 Jiangsu Yangnong Chemical analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Jiangsu Yangnong Chemical has 1 warning sign we think 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.