Earnings Miss: China General Plastics Corporation Missed EPS By 33% And Analysts Are Revising Their Forecasts

Shareholders might have noticed that China General Plastics Corporation (TWSE:1305) filed its yearly result this time last week. The early response was not positive, with shares down 2.3% to NT$18.70 in the past week. It looks like a pretty bad result, all things considered. Although revenues of NT$14b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 33% to hit NT$0.59 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for China General Plastics

Following the recent earnings report, the consensus from two analysts covering China General Plastics is for revenues of NT$13.0b in 2024. This implies a discernible 5.4% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to crater 71% to NT$0.17 in the same period. Before this earnings report, the analysts had been forecasting revenues of NT$14.4b and earnings per share (EPS) of NT$1.45 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

The consensus price target fell 14% to NT$22.40, with the weaker earnings outlook clearly leading valuation 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.4% by the end of 2024. This indicates a significant reduction from annual growth of 2.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China General Plastics is expected to lag the wider 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. 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. 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 China General Plastics. Long-term earnings power is much more important than next year's profits. We have analyst estimates for China General Plastics going out as far as 2025, and you can see them free on our platform here.

You can also see whether China General Plastics is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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.