Texhong Textile Group Limited (HKG:2678) Released Earnings Last Week And Analysts Lifted Their Price Target To CN¥9.61

Shareholders will be ecstatic, with their stake up 33% over the past week following Texhong Textile Group Limited's (HKG:2678) latest annual results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥20b, statutory earnings beat expectations 3.7%, with Texhong Textile Group reporting profits of CN¥0.56 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Texhong Textile Group

Taking into account the latest results, the current consensus from Texhong Textile Group's three analysts is for revenues of CN¥24.3b in 2021, which would reflect a huge 24% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 134% to CN¥1.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥23.2b and earnings per share (EPS) of CN¥1.11 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice gain to earnings per share in particular.

It will come as no surprise to learn that the analysts have increased their price target for Texhong Textile Group 30% to CN¥9.61on the back of these upgrades. 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. There are some variant perceptions on Texhong Textile Group, with the most bullish analyst valuing it at CN¥14.41 and the most bearish at CN¥8.32 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Texhong Textile Group's growth to accelerate, with the forecast 24% annualised growth to the end of 2021 ranking favourably alongside historical growth of 13% 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 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Texhong Textile Group is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Texhong Textile Group's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Texhong Textile Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Texhong Textile Group analysts - going out to 2023, 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 3 warning signs for Texhong Textile Group (1 makes us a bit uncomfortable!) that you need to be mindful of.

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