The Grand Baoxin Auto Group Limited (HKG:1293) Yearly Results Are Out And Analysts Have Published New Forecasts
Shareholders might have noticed that Grand Baoxin Auto Group Limited (HKG:1293) filed its annual result this time last week. The early response was not positive, with shares down 3.0% to HK$0.98 in the past week. Revenues came in 4.7% below expectations, at CN¥36b. Statutory earnings per share were relatively better off, with a per-share profit of CN¥0.22 being roughly in line with analyst estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Grand Baoxin Auto Group
Taking into account the latest results, the consensus forecast from Grand Baoxin Auto Group's six analysts is for revenues of CN¥38.9b in 2020, which would reflect a reasonable 6.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dip 9.1% to CN¥0.20 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥39.1b and earnings per share (EPS) of CN¥0.24 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
The consensus price target held steady at CN¥1.59, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Grand Baoxin Auto Group at CN¥3.00 per share, while the most bearish prices it at CN¥1.01. 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. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Grand Baoxin Auto Group's revenue growth is expected to slow, with forecast 6.6% increase next year well below the historical 8.9%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% next year. Factoring in the forecast slowdown in growth, it seems obvious that Grand Baoxin Auto Group is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Grand Baoxin Auto Group. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Grand Baoxin Auto Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at CN¥1.59, with the latest estimates not enough to have an impact on their price targets.
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. We have forecasts for Grand Baoxin Auto Group going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example - Grand Baoxin Auto Group has 2 warning signs (and 1 which is a bit concerning) we think you should know about.
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