Stock Analysis

Earnings Report: Shanghai Pret Composites Co., Ltd. Missed Revenue Estimates By 22%

SZSE:002324
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Shanghai Pret Composites Co., Ltd. (SZSE:002324) shareholders are probably feeling a little disappointed, since its shares fell 4.7% to CN¥10.19 in the week after its latest quarterly results. Shanghai Pret Composites reported a serious miss, with revenue of CN¥1.9b falling a huge 22% short of analyst estimates. The bright side is that statutory earnings per share of CN¥0.45 were in line with forecasts. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Shanghai Pret Composites

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SZSE:002324 Earnings and Revenue Growth April 28th 2024

Taking into account the latest results, the most recent consensus for Shanghai Pret Composites from four analysts is for revenues of CN¥11.0b in 2024. If met, it would imply a sizeable 26% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 24% to CN¥0.50. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥14.2b and earnings per share (EPS) of CN¥0.70 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 24% to CN¥11.80.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shanghai Pret Composites' past performance and to peers in the same industry. The analysts are definitely expecting Shanghai Pret Composites' growth to accelerate, with the forecast 36% annualised growth to the end of 2024 ranking favourably alongside historical growth of 21% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shanghai Pret Composites is expected to grow much faster than its industry.

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 downgraded Shanghai Pret Composites' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Shanghai Pret Composites' 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. At Simply Wall St, we have a full range of analyst estimates for Shanghai Pret Composites 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 Shanghai Pret Composites that you should be aware of.

Valuation is complex, but we're helping make it simple.

Find out whether Shanghai Pret Composites is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.