Earnings Miss: Zhou Hei Ya International Holdings Company Limited Missed EPS By 6.0% And Analysts Are Revising Their Forecasts

It's been a good week for Zhou Hei Ya International Holdings Company Limited (HKG:1458) shareholders, because the company has just released its latest half-yearly results, and the shares gained 2.1% to HK$3.85. It looks like the results were a bit of a negative overall. While revenues of CN¥2.9b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.0% to hit CN¥0.15 per share. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Zhou Hei Ya International Holdings

Following the latest results, Zhou Hei Ya International Holdings' 13 analysts are now forecasting revenues of CN¥2.78b in 2022. This would be a modest 6.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 4.2% to CN¥0.059. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥2.86b and earnings per share (EPS) of CN¥0.071 in 2022. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The analysts made no major changes to their price target of HK$5.25, suggesting the downgrades are not expected to have a long-term impact on Zhou Hei Ya International Holdings' valuation. 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. There are some variant perceptions on Zhou Hei Ya International Holdings, with the most bullish analyst valuing it at HK$6.36 and the most bearish at HK$4.43 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. One thing stands out from these estimates, which is that Zhou Hei Ya International Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 14% annualised growth until the end of 2022. If achieved, this would be a much better result than the 5.3% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 8.2% per year. So it looks like Zhou Hei Ya International Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhou Hei Ya International Holdings. They also downgraded their revenue estimates, although industry data suggests that Zhou Hei Ya International Holdings' revenues are expected to grow faster than the wider industry. The consensus price target held steady at HK$5.25, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Zhou Hei Ya International Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Zhou Hei Ya International Holdings going out to 2024, 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 Zhou Hei Ya International Holdings 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.