Earnings Miss: Xinte Energy Co., Ltd. Missed EPS By 23% And Analysts Are Revising Their Forecasts

It's been a good week for Xinte Energy Co., Ltd. (HKG:1799) shareholders, because the company has just released its latest yearly results, and the shares gained 4.2% to HK$10.46. It looks like a pretty bad result, all things considered. Although revenues of CN¥31b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 23% to hit CN¥3.04 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Xinte Energy after the latest results.

See our latest analysis for Xinte Energy

Taking into account the latest results, the current consensus, from the ten analysts covering Xinte Energy, is for revenues of CN¥27.1b in 2024. This implies a considerable 12% reduction in Xinte Energy's revenue over the past 12 months. Statutory earnings per share are expected to dive 54% to CN¥1.40 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥31.2b and earnings per share (EPS) of CN¥2.42 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to earnings per share numbers as well.

The analysts made no major changes to their price target of HK$15.39, suggesting the downgrades are not expected to have a long-term impact on Xinte Energy's valuation. 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. Currently, the most bullish analyst values Xinte Energy at HK$20.19 per share, while the most bearish prices it at HK$10.19. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 12% by the end of 2024. This indicates a significant reduction from annual growth of 32% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Xinte Energy is expected to lag 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at HK$15.39, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Xinte Energy going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Xinte Energy that 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.