Earnings Report: Milkyway Chemical Supply Chain Service Co.,Ltd Missed Revenue Estimates By 6.2%

It's been a good week for Milkyway Chemical Supply Chain Service Co.,Ltd (SHSE:603713) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.4% to CN¥53.05. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥2.9b, statutory earnings were in line with expectations, at CN¥2.54 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Milkyway Chemical Supply Chain ServiceLtd

Following the latest results, Milkyway Chemical Supply Chain ServiceLtd's seven analysts are now forecasting revenues of CN¥11.6b in 2024. This would be a notable 13% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to grow 13% to CN¥3.31. In the lead-up to this report, the analysts had been modelling revenues of CN¥12.6b and earnings per share (EPS) of CN¥4.59 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

The consensus price target fell 8.5% to CN¥80.33, 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 Milkyway Chemical Supply Chain ServiceLtd analyst has a price target of CN¥99.12 per share, while the most pessimistic values it at CN¥64.20. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Milkyway Chemical Supply Chain ServiceLtd's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 33% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% per year. So it's pretty clear that, while Milkyway Chemical Supply Chain ServiceLtd's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Milkyway Chemical Supply Chain ServiceLtd. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Milkyway Chemical Supply Chain ServiceLtd 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 2 warning signs for Milkyway Chemical Supply Chain ServiceLtd (1 is potentially serious!) that you need to be mindful 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.