Dongyue Group Limited (HKG:189) Just Reported, And Analysts Assigned A HK$21.29 Price Target

Shareholders will be ecstatic, with their stake up 26% over the past week following Dongyue Group Limited's (HKG:189) latest full-year results. Results overall were respectable, with statutory earnings of CN¥0.98 per share roughly in line with what the analysts had forecast. Revenues of CN¥16b came in 4.7% ahead of analyst predictions. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Dongyue Group

Taking into account the latest results, the consensus forecast from Dongyue Group's five analysts is for revenues of CN¥18.1b in 2022, which would reflect a notable 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 56% to CN¥1.44. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥17.3b and earnings per share (EPS) of CN¥1.43 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.

Even though revenue forecasts increased, the consensus price target 7.6% to HK$21.29, perhaps suggesting thatthe analysts have become more pessimistic about the lack of earnings growth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Dongyue Group analyst has a price target of HK$35.55 per share, while the most pessimistic values it at HK$14.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Dongyue Group's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 6.5% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Dongyue Group to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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. At Simply Wall St, we have a full range of analyst estimates for Dongyue Group going out to 2023, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Dongyue Group .

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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.