Revenue Miss: CGN Mining Company Limited Fell 43% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

It's shaping up to be a tough period for CGN Mining Company Limited (HKG:1164), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (HK$3.6b) coming in 43% below what they had expected. Statutory earnings per share of HK$0.072 fell 26% short. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 CGN Mining

Taking into account the latest results, the most recent consensus for CGN Mining from four analysts is for revenues of HK$7.70b in 2023 which, if met, would be a substantial 111% increase on its sales over the past 12 months. Per-share earnings are expected to surge 51% to HK$0.10. In the lead-up to this report, the analysts had been modelling revenues of HK$7.70b and earnings per share (EPS) of HK$0.11 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The consensus price target held steady at HK$1.40, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values CGN Mining at HK$1.70 per share, while the most bearish prices it at HK$1.22. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await CGN Mining shareholders.

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 CGN Mining's growth to accelerate, with the forecast 111% annualised growth to the end of 2023 ranking favourably alongside historical growth of 30% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 1.4% per year. So it's clear with the acceleration in growth, CGN Mining is expected to grow meaningfully faster than 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. On the plus side, they made no changes to their revenue estimates - and they expect sales to perform better than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on CGN Mining. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for CGN Mining going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for CGN Mining you should be aware of, and 1 of them makes us a bit uncomfortable.

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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.