New Forecasts: Here's What Analysts Think The Future Holds For China Coal Energy Company Limited (HKG:1898)

China Coal Energy Company Limited (HKG:1898) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 11% to HK$5.47 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After the upgrade, the eleven analysts covering China Coal Energy are now predicting revenues of CN¥257b in 2022. If met, this would reflect a notable 11% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to swell 16% to CN¥1.16. Prior to this update, the analysts had been forecasting revenues of CN¥213b and earnings per share (EPS) of CN¥0.91 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for China Coal Energy

Despite these upgrades, the analysts have not made any major changes to their price target of CN¥4.25, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values China Coal Energy at CN¥8.34 per share, while the most bearish prices it at CN¥2.83. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that China Coal Energy's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2022 being well below the historical 23% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.2% per year. Even after the forecast slowdown in growth, it seems obvious that China Coal Energy is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at China Coal Energy.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for China Coal Energy going out to 2024, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.