China Merchants Shekou Industrial Zone Holdings Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

Investors in China Merchants Shekou Industrial Zone Holdings Co., Ltd. (SZSE:001979) had a good week, as its shares rose 9.9% to close at CN¥8.47 following the release of its quarterly results. Revenue came in at CN¥24b, beating expectations by a remarkable 38%, while statutory earnings per share (EPS) were CN¥0.01, missing estimates by an equally remarkable 87%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for China Merchants Shekou Industrial Zone Holdings

Following last week's earnings report, China Merchants Shekou Industrial Zone Holdings' 17 analysts are forecasting 2024 revenues to be CN¥183.8b, approximately in line with the last 12 months. Per-share earnings are expected to leap 24% to CN¥0.84. In the lead-up to this report, the analysts had been modelling revenues of CN¥184.2b and earnings per share (EPS) of CN¥0.89 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥12.00, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic China Merchants Shekou Industrial Zone Holdings analyst has a price target of CN¥17.00 per share, while the most pessimistic values it at CN¥8.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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 China Merchants Shekou Industrial Zone Holdings' revenue growth is expected to slow, with the forecast 0.02% annualised growth rate until the end of 2024 being well below the historical 16% 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 3.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that China Merchants Shekou Industrial Zone Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for China Merchants Shekou Industrial Zone Holdings. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on China Merchants Shekou Industrial Zone Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple China Merchants Shekou Industrial Zone Holdings analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for China Merchants Shekou Industrial Zone Holdings you should be aware of, and 1 of them is a bit unpleasant.

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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.