Natural Food International Holding Limited (HKG:1837) Just Reported, And Analysts Assigned A HK$0.75 Price Target

Shareholders might have noticed that Natural Food International Holding Limited (HKG:1837) filed its annual result this time last week. The early response was not positive, with shares down 9.7% to HK$0.42 in the past week. Revenues were CN¥1.6b, with Natural Food International Holding reporting some 6.8% below analyst expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Check out our latest analysis for Natural Food International Holding

Taking into account the latest results, the most recent consensus for Natural Food International Holding from sole analyst is for revenues of CN¥1.84b in 2022 which, if met, would be a solid 14% increase on its sales over the past 12 months. Per-share earnings are expected to jump 26% to CN¥0.05. Before this earnings report, the analyst had been forecasting revenues of CN¥1.95b and earnings per share (EPS) of CN¥0.048 in 2022. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analyst is now more bullish on the company's earnings power.

The consensus price target fell 18% to HK$0.75, with the analyst signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Natural Food International Holding's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 0.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.2% annually. So it looks like Natural Food International Holding is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Natural Food International Holding's earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Natural Food International Holding 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.