Earnings Update: Here's Why Analysts Just Lifted Their Maanshan Iron & Steel Company Limited (HKG:323) Price Target To HK$1.80

Maanshan Iron & Steel Company Limited (HKG:323) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues were CN¥82b, with Maanshan Iron & Steel reporting some 4.2% below analyst 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, Maanshan Iron & Steel's six analysts currently expect revenues in 2025 to be CN¥81.6b, approximately in line with the last 12 months. Maanshan Iron & Steel is also expected to turn profitable, with statutory earnings of CN¥0.063 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥84.5b and earnings per share (EPS) of CN¥0.034 in 2025. Although the analysts have lowered their revenue forecasts, they've also made a massive increase in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

View our latest analysis for Maanshan Iron & Steel

The average price target increased 12% to HK$1.80, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue. 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 Maanshan Iron & Steel analyst has a price target of HK$2.20 per share, while the most pessimistic values it at HK$1.30. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.3% by the end of 2025. This indicates a significant reduction from annual growth of 2.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. It's pretty clear that Maanshan Iron & Steel's revenues are expected to perform substantially worse than 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 Maanshan Iron & Steel following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Maanshan Iron & Steel going out to 2027, and you can see them free on our platform here..

You still need to take note of risks, for example - Maanshan Iron & Steel has 1 warning sign we think 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.