News Flash: 3 Analysts Think Shanghai Pret Composites Co., Ltd. (SZSE:002324) Earnings Are Under Threat

The analysts covering Shanghai Pret Composites Co., Ltd. (SZSE:002324) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 5.7% to CN¥7.65 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the three analysts covering Shanghai Pret Composites are now predicting revenues of CN¥8.9b in 2024. If met, this would reflect a satisfactory 5.8% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 21% to CN¥0.29 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥11b and earnings per share (EPS) of CN¥0.59 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shanghai Pret Composites' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Shanghai Pret Composites

It'll come as no surprise then, to learn that the analysts have cut their price target 26% to CN¥8.70.

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. We would highlight that Shanghai Pret Composites' revenue growth is expected to slow, with the forecast 7.8% annualised growth rate until the end of 2024 being well below the historical 21% p.a. growth over the last 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 Shanghai Pret Composites is also expected to grow slower than other industry participants.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shanghai Pret Composites. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, 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.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.