Earnings Miss: Tongkun Group Co., Ltd. Missed EPS By 42% And Analysts Are Revising Their Forecasts

The quarterly results for Tongkun Group Co., Ltd. (SHSE:601233) were released last week, making it a good time to revisit its performance. Statutory earnings per share disappointed, coming in -42% short of expectations, at CN¥0.21. Fortunately revenue performance was a lot stronger at CN¥27b arriving 18% ahead of predictions. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Tongkun Group

Taking into account the latest results, the current consensus, from the ten analysts covering Tongkun Group, is for revenues of CN¥91.1b in 2024. This implies a discernible 3.1% reduction in Tongkun Group's revenue over the past 12 months. Per-share earnings are expected to shoot up 44% to CN¥1.06. In the lead-up to this report, the analysts had been modelling revenues of CN¥92.4b and earnings per share (EPS) of CN¥1.24 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

The average price target fell 8.4% to CN¥15.45, with reduced earnings forecasts clearly tied to a lower valuation estimate. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Tongkun Group, with the most bullish analyst valuing it at CN¥18.90 and the most bearish at CN¥10.50 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 6.0% by the end of 2024. This indicates a significant reduction from annual growth of 14% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. It's pretty clear that Tongkun Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tongkun Group. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Tongkun Group analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Tongkun Group (1 is a bit 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.