Revenue Beat: Giant Biogene Holding Co., Ltd. Beat Analyst Estimates By 12%

Giant Biogene Holding Co., Ltd. (HKG:2367) shareholders are probably feeling a little disappointed, since its shares fell 2.8% to HK$39.65 in the week after its latest interim results. It was a mildly positive result, with revenues exceeding expectations at CN¥2.5b, while statutory earnings per share (EPS) of CN¥1.46 were in line with analyst forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are 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 estimates to see what could be in store for next year.

See our latest analysis for Giant Biogene Holding

Taking into account the latest results, the most recent consensus for Giant Biogene Holding from 16 analysts is for revenues of CN¥5.12b in 2024. If met, it would imply a meaningful 15% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 10.0% to CN¥1.93. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥4.85b and earnings per share (EPS) of CN¥1.80 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$56.91, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Giant Biogene Holding analyst has a price target of HK$63.46 per share, while the most pessimistic values it at HK$48.00. This is a very narrow spread of estimates, implying either that Giant Biogene Holding is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Giant Biogene Holding's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 32% growth on an annualised basis. This is compared to a historical growth rate of 49% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.7% annually. So it's pretty clear that, while Giant Biogene Holding's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Giant Biogene Holding following these results. 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 Giant Biogene Holding. Long-term earnings power is much more important than next year's profits. We have forecasts for Giant Biogene Holding going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Giant Biogene Holding has 1 warning sign we think 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.