Shandong Sinocera Functional Material Co., Ltd. Just Missed Revenue By 12%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on Shandong Sinocera Functional Material Co., Ltd. (SZSE:300285), given that the company fell short of expectations when it released its second-quarter results last week. It looks like a weak result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥1.1b missed by 12%, and statutory earnings per share of CN¥0.20 fell short of forecasts by 9.1%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Shandong Sinocera Functional Material

Taking into account the latest results, the current consensus from Shandong Sinocera Functional Material's 14 analysts is for revenues of CN¥4.33b in 2024. This would reflect a meaningful 9.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 27% to CN¥0.74. Before this earnings report, the analysts had been forecasting revenues of CN¥4.55b and earnings per share (EPS) of CN¥0.77 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.0% to CN¥25.08. 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. Currently, the most bullish analyst values Shandong Sinocera Functional Material at CN¥28.00 per share, while the most bearish prices it at CN¥19.98. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shandong Sinocera Functional Material's past performance and to peers in the same industry. The analysts are definitely expecting Shandong Sinocera Functional Material's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 13% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shandong Sinocera Functional Material is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shandong Sinocera Functional Material. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Shandong Sinocera Functional Material going out to 2026, and you can see them free on our platform here..

It might also be worth considering whether Shandong Sinocera Functional Material's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com