China Resources Building Materials Technology Holdings Limited Just Missed Revenue By 12%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that China Resources Building Materials Technology Holdings Limited (HKG:1313) released its interim result to the market. The early response was not positive, with shares down 6.6% to HK$1.56 in the past week. Revenues were CN¥10b, 12% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of CN¥0.091 being in line with what the analysts forecast. 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. 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 China Resources Building Materials Technology Holdings

Following last week's earnings report, China Resources Building Materials Technology Holdings' 14 analysts are forecasting 2024 revenues to be CN¥23.8b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 217% to CN¥0.11. Before this earnings report, the analysts had been forecasting revenues of CN¥24.2b and earnings per share (EPS) of CN¥0.15 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 13% to HK$1.93, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic China Resources Building Materials Technology Holdings analyst has a price target of HK$3.75 per share, while the most pessimistic values it at HK$1.02. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 7.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.0% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect China Resources Building Materials Technology Holdings to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that China Resources Building Materials Technology Holdings' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for China Resources Building Materials Technology Holdings going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - China Resources Building Materials Technology Holdings has 2 warning signs 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.