Earnings Miss: Shenzhen Topband Co., Ltd. Missed EPS By 11% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Shenzhen Topband Co., Ltd. (SZSE:002139) released its full-year result to the market. The early response was not positive, with shares down 2.9% to CN¥9.14 in the past week. Revenues were in line with forecasts, at CN¥9.0b, although statutory earnings per share came in 11% below what the analysts expected, at CN¥0.41 per share. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Shenzhen Topband

After the latest results, the nine analysts covering Shenzhen Topband are now predicting revenues of CN¥10.4b in 2024. If met, this would reflect a decent 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 26% to CN¥0.52. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥11.2b and earnings per share (EPS) of CN¥0.67 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.

The consensus price target fell 15% to CN¥13.01, with the weaker earnings outlook clearly leading valuation estimates. 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 Shenzhen Topband analyst has a price target of CN¥14.48 per share, while the most pessimistic values it at CN¥11.00. This is a very narrow spread of estimates, implying either that Shenzhen Topband is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Shenzhen Topband's past performance and to peers in the same industry. We would highlight that Shenzhen Topband's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2024 being well below the historical 21% p.a. growth over the last five years. Compare this to the 393 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it looks like Shenzhen Topband is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shenzhen Topband. They also downgraded their 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Shenzhen Topband'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 forecasts for Shenzhen Topband going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Shenzhen Topband has 1 warning sign we think 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.