What Does The Future Hold For Sino Biopharmaceutical Limited (HKG:1177)? These Analysts Have Been Cutting Their Estimates

One thing we could say about the analysts on Sino Biopharmaceutical Limited (HKG:1177) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the latest consensus from Sino Biopharmaceutical's 22 analysts is for revenues of CN¥29b in 2024, which would reflect a meaningful 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 57% to CN¥0.16. Previously, the analysts had been modelling revenues of CN¥33b and earnings per share (EPS) of CN¥0.17 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a minor downgrade to earnings per share numbers as well.

See our latest analysis for Sino Biopharmaceutical

Despite the cuts to forecast earnings, there was no real change to the CN¥4.32 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Sino Biopharmaceutical at CN¥8.44 per share, while the most bearish prices it at CN¥2.80. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Sino Biopharmaceutical's growth to accelerate, with the forecast 10% annualised growth to the end of 2024 ranking favourably alongside historical growth of 5.3% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 10% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sino Biopharmaceutical is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Sino Biopharmaceutical. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Sino Biopharmaceutical going forwards.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Sino Biopharmaceutical analysts - going out to 2026, 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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