Kunlun Energy Company Limited Just Missed Earnings - But Analysts Have Updated Their Models

Kunlun Energy Company Limited (HKG:135) shareholders are probably feeling a little disappointed, since its shares fell 7.2% to HK$6.66 in the week after its latest annual results. It was not a great result overall. While revenues of CN¥177b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 12% to hit CN¥0.64 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kunlun Energy after the latest results.

View our latest analysis for Kunlun Energy

Taking into account the latest results, the most recent consensus for Kunlun Energy from 14 analysts is for revenues of CN¥181.6b in 2024. If met, it would imply a reasonable 2.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to expand 13% to CN¥0.74. In the lead-up to this report, the analysts had been modelling revenues of CN¥191.2b and earnings per share (EPS) of CN¥0.80 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The analysts made no major changes to their price target of HK$8.36, suggesting the downgrades are not expected to have a long-term impact on Kunlun Energy's valuation. 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. There are some variant perceptions on Kunlun Energy, with the most bullish analyst valuing it at HK$9.67 and the most bearish at HK$7.50 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Kunlun Energy is an easy business to forecast or the the analysts are all using similar assumptions.

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. We would highlight that Kunlun Energy's revenue growth is expected to slow, with the forecast 2.4% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Kunlun Energy.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kunlun Energy. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 in mind, we wouldn't be too quick to come to a conclusion on Kunlun Energy. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Kunlun Energy analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Kunlun Energy you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.