GCL-Poly Energy Holdings Limited Just Recorded A 16% Revenue Beat: Here's What Analysts Think

GCL-Poly Energy Holdings Limited (HKG:3800) defied analyst predictions to release its yearly results, which were ahead of market expectations. It was a positive result, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 16% higher than the analysts had forecast, at CN¥20b, while EPS of CN¥0.21 beat analyst models by 5.7%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for GCL-Poly Energy Holdings

Taking into account the latest results, the current consensus from GCL-Poly Energy Holdings' four analysts is for revenues of CN¥20.2b in 2022, which would reflect a reasonable 2.5% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 50% to CN¥0.28. Before this earnings report, the analysts had been forecasting revenues of CN¥19.6b and earnings per share (EPS) of CN¥0.26 in 2022. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Despite these upgrades,the analysts have not made any major changes to their price target of HK$4.16, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 GCL-Poly Energy Holdings at HK$4.50 per share, while the most bearish prices it at HK$3.67. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that GCL-Poly Energy Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.5% annualised growth until the end of 2022. If achieved, this would be a much better result than the 7.5% annual decline 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 revenue grow 19% per year. So although GCL-Poly Energy Holdings' revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around GCL-Poly Energy Holdings' earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for GCL-Poly Energy Holdings 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 1 warning sign for GCL-Poly Energy Holdings that you need to be mindful 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.