Earnings Update: China Coal Energy Company Limited (HKG:1898) Just Reported Its Interim Results And Analysts Are Updating Their Forecasts

It's shaping up to be a tough period for China Coal Energy Company Limited (HKG:1898), which a week ago released some disappointing interim results that could have a notable impact on how the market views the stock. China Coal Energy missed analyst forecasts, with revenues of CN¥93b and statutory earnings per share (EPS) of CN¥0.81, falling short by 2.7% and 4.7% respectively. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for China Coal Energy

Taking into account the latest results, the current consensus from China Coal Energy's eight analysts is for revenues of CN¥189.6b in 2024. This would reflect a satisfactory 7.3% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 9.1% to CN¥1.44. In the lead-up to this report, the analysts had been modelling revenues of CN¥185.5b and earnings per share (EPS) of CN¥1.32 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Despite these upgrades,the analysts have not made any major changes to their price target of HK$10.10, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values China Coal Energy at HK$11.66 per share, while the most bearish prices it at HK$8.51. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting China Coal Energy's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect China Coal Energy to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around China Coal Energy'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. 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 China Coal Energy. 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 China Coal Energy going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for China Coal Energy (1 can't be ignored) 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.