Stock Analysis

Shanghai Pret Composites Co., Ltd. (SZSE:002324) Analysts Just Slashed This Year's Estimates

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Market forces rained on the parade of Shanghai Pret Composites Co., Ltd. (SZSE:002324) shareholders today, when the analysts downgraded their 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.

After this downgrade, Shanghai Pret Composites' four analysts are now forecasting revenues of CN¥11b in 2024. This would be a substantial 26% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 24% to CN¥0.50. Prior to this update, the analysts had been forecasting revenues of CN¥14b and earnings per share (EPS) of CN¥0.70 in 2024. Indeed, we can see that the analysts are a lot more bearish about Shanghai Pret Composites' prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Shanghai Pret Composites

SZSE:002324 Earnings and Revenue Growth April 30th 2024

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Shanghai Pret Composites' rate of growth is expected to accelerate meaningfully, with the forecast 36% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 21% p.a. 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. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shanghai Pret Composites to grow faster than the wider industry.

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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Shanghai Pret Composites, and a few readers might choose to steer clear of the stock.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. You can learn more about our debt analysis for free on our platform here.

You can also see our analysis of Shanghai Pret Composites' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.