China Resources Microelectronics Limited Just Missed Earnings - But Analysts Have Updated Their Models

It's been a good week for China Resources Microelectronics Limited (SHSE:688396) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.3% to CN¥35.74. Results overall were not great, with earnings of CN¥0.18 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥2.7b and were slightly better than forecasts. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for China Resources Microelectronics

After the latest results, the seven analysts covering China Resources Microelectronics are now predicting revenues of CN¥10.6b in 2024. If met, this would reflect a decent 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 8.5% to CN¥0.80. Before this earnings report, the analysts had been forecasting revenues of CN¥10.3b and earnings per share (EPS) of CN¥0.92 in 2024. So it's pretty clear the analysts have mixed opinions on China Resources Microelectronics after the latest results; even though they upped their revenue numbers, it came at the cost of a substantial drop in per-share earnings expectations.

The consensus price target was unchanged at CN¥39.16, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 China Resources Microelectronics at CN¥47.00 per share, while the most bearish prices it at CN¥28.10. 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.

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. The analysts are definitely expecting China Resources Microelectronics' growth to accelerate, with the forecast 21% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.2% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. China Resources Microelectronics is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at CN¥39.16, 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 Resources Microelectronics. Long-term earnings power is much more important than next year's profits. We have forecasts for China Resources Microelectronics going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for China Resources Microelectronics that you need to be mindful of.

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

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.