Lee and Man Paper Manufacturing Limited Just Recorded A 16% EPS Beat: Here's What Analysts Are Forecasting Next

As you might know, Lee and Man Paper Manufacturing Limited (HKG:2314) recently reported its yearly numbers. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at HK$26b, statutory earnings beat expectations by a notable 16%, coming in at HK$0.81 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Lee and Man Paper Manufacturing

Following the latest results, Lee and Man Paper Manufacturing's 14 analysts are now forecasting revenues of HK$30.4b in 2021. This would be a notable 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 25% to HK$1.02. Before this earnings report, the analysts had been forecasting revenues of HK$30.0b and earnings per share (EPS) of HK$0.78 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the considerable lift to earnings per share expectations following these results.

The consensus price target rose 10% to HK$7.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Lee and Man Paper Manufacturing analyst has a price target of HK$9.50 per share, while the most pessimistic values it at HK$3.40. 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.

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. It's clear from the latest estimates that Lee and Man Paper Manufacturing's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 9.2% 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 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Lee and Man Paper Manufacturing to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Lee and Man Paper Manufacturing's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still 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 in mind, we wouldn't be too quick to come to a conclusion on Lee and Man Paper Manufacturing. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Lee and Man Paper Manufacturing going out to 2023, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Lee and Man Paper Manufacturing you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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