China Merchants Shekou Industrial Zone Holdings Co., Ltd. (SZSE:001979) Just Recorded An Earnings Miss And Analysts Are Updating Their Numbers

China Merchants Shekou Industrial Zone Holdings Co., Ltd. (SZSE:001979) just released its latest second-quarter report and things are not looking great. China Merchants Shekou Industrial Zone Holdings delivered a grave earnings miss, with both revenues (CN¥28b) and statutory earnings per share (CN¥0.10) falling badly short of analyst expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for China Merchants Shekou Industrial Zone Holdings

Taking into account the latest results, the most recent consensus for China Merchants Shekou Industrial Zone Holdings from 16 analysts is for revenues of CN¥182.8b in 2024. If met, it would imply a satisfactory 4.6% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 28% to CN¥0.73. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥181.4b and earnings per share (EPS) of CN¥0.78 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at CN¥10.84, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values China Merchants Shekou Industrial Zone Holdings at CN¥12.30 per share, while the most bearish prices it at CN¥9.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await China Merchants Shekou Industrial Zone Holdings shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that China Merchants Shekou Industrial Zone Holdings' revenue growth is expected to slow, with the forecast 9.4% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.8% per year. Even after the forecast slowdown in growth, it seems obvious that China Merchants Shekou Industrial Zone Holdings is also expected 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at CN¥10.84, 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 China Merchants Shekou Industrial Zone Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for China Merchants Shekou Industrial Zone Holdings going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for China Merchants Shekou Industrial Zone Holdings (1 is potentially serious!) that you should be aware of.

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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.