Need To Know: Analysts Are Much More Bullish On Shougang Fushan Resources Group Limited (HKG:639)

Shareholders in Shougang Fushan Resources Group Limited (HKG:639) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the upgrade, the most recent consensus for Shougang Fushan Resources Group from its four analysts is for revenues of HK$4.7b in 2021 which, if met, would be a notable 17% increase on its sales over the past 12 months. Per-share earnings are expected to surge 32% to HK$0.27. Prior to this update, the analysts had been forecasting revenues of HK$4.2b and earnings per share (EPS) of HK$0.23 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

See our latest analysis for Shougang Fushan Resources Group

Despite these upgrades, the analysts have not made any major changes to their price target of HK$2.21, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. Currently, the most bullish analyst values Shougang Fushan Resources Group at HK$2.44 per share, while the most bearish prices it at HK$1.88. With such a narrow range of valuations, 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. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 17% growth on an annualised basis. That is in line with its 16% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 7.0% per year. So it's pretty clear that Shougang Fushan Resources Group is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Shougang Fushan Resources Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Shougang Fushan Resources Group going out to 2023, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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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