DongHua Testing Technology Co. , Ltd. (SZSE:300354) Just Reported Earnings, And Analysts Cut Their Target Price

Last week, you might have seen that DongHua Testing Technology Co. , Ltd. (SZSE:300354) released its half-year result to the market. The early response was not positive, with shares down 5.5% to CN¥28.72 in the past week. It was a credible result overall, with revenues of CN¥276m and statutory earnings per share of CN¥0.63 both in line with analyst estimates, showing that DongHua Testing Technology is executing in line with 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for DongHua Testing Technology

Following the latest results, DongHua Testing Technology's three analysts are now forecasting revenues of CN¥640.4m in 2024. This would be a huge 41% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 65% to CN¥1.39. In the lead-up to this report, the analysts had been modelling revenues of CN¥659.0m and earnings per share (EPS) of CN¥1.43 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The consensus price target fell 13% to CN¥40.80, with the weaker earnings outlook clearly leading valuation estimates.

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 DongHua Testing Technology's growth to accelerate, with the forecast 99% annualised growth to the end of 2024 ranking favourably alongside historical growth of 23% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that DongHua Testing Technology is expected to grow much faster than its 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. They also downgraded DongHua Testing Technology's revenue estimates, but industry data suggests that it 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 DongHua Testing Technology'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 DongHua Testing Technology analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for DongHua Testing Technology that we have uncovered.

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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.