Zhejiang Huace Film & TV Co., Ltd. Recorded A 41% Miss On Revenue: Analysts Are Revisiting Their Models

Last week, you might have seen that Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133) released its half-year result to the market. The early response was not positive, with shares down 5.7% to CN¥5.10 in the past week. Zhejiang Huace Film & TV reported a serious miss, with revenue of CN¥368m falling a huge 41% short of analyst estimates. The bright side is that statutory earnings per share of CN¥0.20 were in line with forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Zhejiang Huace Film & TV after the latest results.

See our latest analysis for Zhejiang Huace Film & TV

Following the latest results, Zhejiang Huace Film & TV's six analysts are now forecasting revenues of CN¥2.44b in 2024. This would be a sizeable 63% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 84% to CN¥0.21. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.90b and earnings per share (EPS) of CN¥0.27 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The analysts made no major changes to their price target of CN¥6.48, suggesting the downgrades are not expected to have a long-term impact on Zhejiang Huace Film & TV's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Zhejiang Huace Film & TV, with the most bullish analyst valuing it at CN¥8.40 and the most bearish at CN¥5.30 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Zhejiang Huace Film & TV's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 166% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. Not only are Zhejiang Huace Film & TV's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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 Zhejiang Huace Film & TV's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at CN¥6.48, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Zhejiang Huace Film & TV. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Zhejiang Huace Film & TV going out to 2026, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Zhejiang Huace Film & TV , and understanding these should be part of your investment process.

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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.