Results: Shenzhen Sunline Tech Co., Ltd. Delivered A Surprise Loss And Now Analysts Have New Forecasts

It's been a good week for Shenzhen Sunline Tech Co., Ltd. (SZSE:300348) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.5% to CN¥7.62. It was a pretty bad result overall, with revenues coming in 64% lower than the analysts predicted. Statutory earnings correspondingly nosedived, with Shenzhen Sunline Tech reporting a loss of CN¥0.0052 per share, where the analysts were expecting a profit. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Shenzhen Sunline Tech

Following the latest results, Shenzhen Sunline Tech's eight analysts are now forecasting revenues of CN¥2.51b in 2024. This would be a huge 31% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 168% to CN¥0.13. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.27b and earnings per share (EPS) of CN¥0.31 in 2024. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the pretty serious reduction to EPS estimates following the latest report.

The consensus price target fell 10% to CN¥10.37, suggesting that the analysts are primarily focused on earnings as the driver of value for this business. 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 Shenzhen Sunline Tech, with the most bullish analyst valuing it at CN¥13.25 and the most bearish at CN¥7.88 per share. 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 Shenzhen Sunline Tech 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. It's clear from the latest estimates that Shenzhen Sunline Tech's rate of growth is expected to accelerate meaningfully, with the forecast 44% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Sunline Tech 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 Shenzhen Sunline Tech's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Shenzhen Sunline Tech analysts - going out to 2026, and you can see them free on our platform here.

You can also see whether Shenzhen Sunline Tech is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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.