Analysts Are Updating Their Angang Steel Company Limited (HKG:347) Estimates After Its Half-Year Results

Last week, you might have seen that Angang Steel Company Limited (HKG:347) released its interim result to the market. The early response was not positive, with shares down 4.4% to HK$1.09 in the past week. Revenues came in at CN¥55b, in line with expectations, while statutory losses per share were substantially higher than expected, at CN¥0.29 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Angang Steel

Taking into account the latest results, Angang Steel's eight analysts currently expect revenues in 2024 to be CN¥108.7b, approximately in line with the last 12 months. Losses are expected to increase substantially, hitting CN¥0.55 per share. Before this earnings announcement, the analysts had been modelling revenues of CN¥109.2b and losses of CN¥0.30 per share in 2024. So it's pretty clear the analysts have mixed opinions on Angang Steel even after this update; although they reconfirmed their revenue numbers, it came at the cost of a massive increase in per-share losses.

The consensus price target held steady at HK$1.65, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. 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. There are some variant perceptions on Angang Steel, with the most bullish analyst valuing it at HK$3.06 and the most bearish at HK$1.02 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.5% by the end of 2024. This indicates a significant reduction from annual growth of 3.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Angang Steel is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Angang Steel's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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

It might also be worth considering whether Angang Steel's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.