Sino Biopharmaceutical Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Sino Biopharmaceutical Limited (HKG:1177) missed earnings with its latest third-quarter results, disappointing overly-optimistic forecasters. Unfortunately, Sino Biopharmaceutical delivered a serious earnings miss. Revenues of CN¥5.7b were 18% below expectations, and statutory earnings per share of CN¥0.0018 missed estimates by 96%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Sino Biopharmaceutical

Taking into account the latest results, the consensus forecast from Sino Biopharmaceutical's 23 analysts is for revenues of CN¥30.0b in 2021, which would reflect a major 30% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 58% to CN¥0.19. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥31.5b and earnings per share (EPS) of CN¥0.20 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The consensus price target fell 7.3% to HK$10.01, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values Sino Biopharmaceutical at HK$14.15 per share, while the most bearish prices it at HK$6.53. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sino Biopharmaceutical's past performance and to peers in the same industry. It's clear from the latest estimates that Sino Biopharmaceutical's rate of growth is expected to accelerate meaningfully, with the forecast 30% revenue growth noticeably faster than its historical growth of 17%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sino Biopharmaceutical is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Sino Biopharmaceutical. Long-term earnings power is much more important than next year's profits. We have forecasts for Sino Biopharmaceutical going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Sino Biopharmaceutical that you need to be mindful of.

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