China Hongqiao Group Limited (HKG:1378) Half-Year Results: Here's What Analysts Are Forecasting For This Year

It's been a good week for China Hongqiao Group Limited (HKG:1378) shareholders, because the company has just released its latest interim results, and the shares gained 4.4% to HK$10.36. Results were roughly in line with estimates, with revenues of CN¥74b and statutory earnings per share of CN¥1.20. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for China Hongqiao Group

Taking into account the latest results, the consensus forecast from China Hongqiao Group's 17 analysts is for revenues of CN¥145.3b in 2024. This reflects an okay 2.7% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be CN¥1.90, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥141.9b and earnings per share (EPS) of CN¥1.68 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of HK$13.28, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Hongqiao Group analyst has a price target of HK$17.99 per share, while the most pessimistic values it at HK$9.65. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that China Hongqiao Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.4% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than China Hongqiao Group.

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 China Hongqiao Group following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. The consensus price target held steady at HK$13.28, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for China Hongqiao Group going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with China Hongqiao Group , and understanding this should be part of your investment process.

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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.