Results: XD Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

It's been a sad week for XD Inc. (HKG:2400), who've watched their investment drop 14% to HK$32.30 in the week since the company reported its annual result. The result was positive overall - although revenues of CN¥5.0b were in line with what the analysts predicted, XD surprised by delivering a statutory profit of CN¥1.69 per share, modestly greater than 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.

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Taking into account the latest results, the most recent consensus for XD from eight analysts is for revenues of CN¥5.18b in 2025. If met, it would imply a reasonable 3.4% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be CN¥1.68, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of CN¥5.53b and earnings per share (EPS) of CN¥1.61 in 2025. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

Check out our latest analysis for XD

The average price target rose 11% to HK$30.60, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values XD at HK$47.93 per share, while the most bearish prices it at HK$15.14. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that XD's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.4% growth on an annualised basis. This is compared to a historical growth rate of 9.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that XD is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around XD's earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 XD analysts - going out to 2027, and you can see them free on our platform here.

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