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

Investors in China Hongqiao Group Limited (HKG:1378) had a good week, as its shares rose 9.2% to close at HK$10.66 following the release of its half-year results. It was a credible result overall, with revenues of CN¥74b and statutory earnings per share of CN¥1.20 both in line with analyst estimates, showing that China Hongqiao Group is executing in line with expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for China Hongqiao Group

After the latest results, the 18 analysts covering China Hongqiao Group are now predicting revenues of CN¥146.4b in 2024. If met, this would reflect an okay 3.5% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be CN¥1.89, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥145.6b and earnings per share (EPS) of CN¥1.85 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of HK$13.55, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 China Hongqiao Group analyst has a price target of HK$18.02 per share, while the most pessimistic values it at HK$9.70. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that China Hongqiao Group's revenue growth is expected to slow, with the forecast 7.1% annualised growth rate until the end of 2024 being well below the historical 12% p.a. growth over the last five years. Compare this to the 53 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.5% per year. Factoring in the forecast slowdown in growth, it looks like China Hongqiao Group is forecast to grow at about the same rate as the wider industry.

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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at HK$13.55, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on China Hongqiao Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple China Hongqiao Group analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for China Hongqiao Group that you need to be mindful 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.