It's been a good week for China Resources Cement Holdings Limited (HKG:1313) shareholders, because the company has just released its latest full-year results, and the shares gained 8.6% to HK$9.25. It was an okay result overall, with revenues coming in at HK$39b, roughly what the analysts had been expecting. 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.
Taking into account the latest results, China Resources Cement Holdings' 18 analysts currently expect revenues in 2020 to be HK$38.6b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be HK$1.22, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of HK$39.2b and earnings per share (EPS) of HK$1.20 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of HK$11.06, suggesting that the company has met expectations in its recent result. 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 China Resources Cement Holdings at HK$12.70 per share, while the most bearish prices it at HK$8.90. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await China Resources Cement Holdings shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.9%, a significant reduction from annual growth of 7.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 0.4% next year. It's pretty clear that China Resources Cement Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple China Resources Cement Holdings analysts - going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example - China Resources Cement Holdings has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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