Dongyue Group Limited (HKG:189) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a good week for Dongyue Group Limited (HKG:189) shareholders, because the company has just released its latest full-year results, and the shares gained 4.9% to HK$7.34. Dongyue Group reported CN¥14b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of CN¥0.31 beat expectations, being 2.8% higher than what the analysts expected. 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.

Check out our latest analysis for Dongyue Group

After the latest results, the four analysts covering Dongyue Group are now predicting revenues of CN¥18.0b in 2024. If met, this would reflect a huge 24% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 74% to CN¥0.71. In the lead-up to this report, the analysts had been modelling revenues of CN¥17.1b and earnings per share (EPS) of CN¥0.74 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a huge to revenue, the consensus also made a small dip in its earnings per share forecasts.

The analysts also upgraded Dongyue Group's price target 8.3% to HK$9.99, implying that the higher revenue expected to generate enough value to offset the forecast decline in earnings. 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. There are some variant perceptions on Dongyue Group, with the most bullish analyst valuing it at HK$11.10 and the most bearish at HK$8.87 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 clear from the latest estimates that Dongyue Group's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 8.6% 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 8.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dongyue Group is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Dongyue Group. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Dongyue Group analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Dongyue Group that 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.