Earnings Miss: China Vanke Co., Ltd. Missed EPS By 36% And Analysts Are Revising Their Forecasts

China Vanke Co., Ltd. (SZSE:000002) shareholders are probably feeling a little disappointed, since its shares fell 2.8% to CN¥9.00 in the week after its latest full-year results. Results overall were not great, with earnings of CN¥1.03 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥466b and were slightly better than 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for China Vanke

Following the recent earnings report, the consensus from 17 analysts covering China Vanke is for revenues of CN¥404.9b in 2024. This implies an uncomfortable 13% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to decline 12% to CN¥0.90 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥430.7b and earnings per share (EPS) of CN¥1.59 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 6.6% to CN¥11.40. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on China Vanke, with the most bullish analyst valuing it at CN¥21.00 and the most bearish at CN¥7.17 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 13% annualised decline to the end of 2024. That is a notable change from historical growth of 9.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Vanke is expected to lag 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 China Vanke's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on China Vanke. 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 China Vanke going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 3 warning signs we've spotted with China Vanke (including 1 which is concerning) .

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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.