Shanghai Haohai Biological Technology Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

Last week, you might have seen that Shanghai Haohai Biological Technology Co., Ltd. (HKG:6826) released its full-year result to the market. The early response was not positive, with shares down 4.0% to HK$40.75 in the past week. It was not a great result overall. While revenues of CN¥1.8b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 20% to hit CN¥2.00 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Shanghai Haohai Biological Technology after the latest results.

Check out our latest analysis for Shanghai Haohai Biological Technology

Following the latest results, Shanghai Haohai Biological Technology's three analysts are now forecasting revenues of CN¥1.92b in 2022. This would be a meaningful 8.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 44% to CN¥2.91. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.16b and earnings per share (EPS) of CN¥2.97 in 2022. Indeed, we can see that sentiment has declined measurably after results came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 27% to HK$72.05. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Shanghai Haohai Biological Technology at HK$111 per share, while the most bearish prices it at HK$45.37. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

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. We can infer from the latest estimates that forecasts expect a continuation of Shanghai Haohai Biological Technology'shistorical trends, as the 8.8% annualised revenue growth to the end of 2022 is roughly in line with the 8.0% annual revenue growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 35% annually. So it's pretty clear that Shanghai Haohai Biological Technology is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shanghai Haohai Biological Technology. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Shanghai Haohai Biological Technology going out to 2023, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for Shanghai Haohai Biological Technology that you need to take into consideration.

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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.