Beijing Chunlizhengda Medical Instruments Co., Ltd. Just Beat EPS By 5.1%: Here's What Analysts Think Will Happen Next

Shareholders of Beijing Chunlizhengda Medical Instruments Co., Ltd. (HKG:1858) will be pleased this week, given that the stock price is up 15% to HK$19.24 following its latest annual results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥938m, statutory earnings beat expectations 5.1%, with Beijing Chunlizhengda Medical Instruments reporting profits of CN¥0.82 per share. 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.

View our latest analysis for Beijing Chunlizhengda Medical Instruments

Following the latest results, Beijing Chunlizhengda Medical Instruments' sole analyst are now forecasting revenues of CN¥1.22b in 2021. This would be a sizeable 30% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 31% to CN¥1.07. Yet prior to the latest earnings, the analyst had been anticipated revenues of CN¥1.28b and earnings per share (EPS) of CN¥0.90 in 2021. Although the analyst has lowered their sales forecasts, they've also made a substantial gain in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

There's been no real change to the average price target of CN¥29.59, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Beijing Chunlizhengda Medical Instruments'historical trends, as the 30% annualised revenue growth to the end of 2021 is roughly in line with the 37% annual revenue growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 27% per year. It's clear that while Beijing Chunlizhengda Medical Instruments' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Beijing Chunlizhengda Medical Instruments' earnings potential next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Yet - earnings are more important to the intrinsic value of the business. 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 Beijing Chunlizhengda Medical Instruments. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Beijing Chunlizhengda Medical Instruments .

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