Analysts Are Updating Their Hengan International Group Company Limited (HKG:1044) Estimates After Its Annual Results
Last week saw the newest annual earnings release from Hengan International Group Company Limited (HKG:1044), an important milestone in the company's journey to build a stronger business. It was a workmanlike result, with revenues of CN¥22b coming in 3.1% ahead of expectations, and statutory earnings per share of CN¥3.20, in line with analyst appraisals. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Hengan International Group
After the latest results, the 19 analysts covering Hengan International Group are now predicting revenues of CN¥24.1b in 2020. If met, this would reflect a credible 7.0% improvement in sales compared to the last 12 months. Per-share earnings are expected to grow 11% to CN¥3.64. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥24.1b and earnings per share (EPS) of CN¥3.63 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at HK$68.85. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Hengan International Group at HK$88.00 per share, while the most bearish prices it at HK$54.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. The analysts are definitely expecting Hengan International Group'sgrowth to accelerate, with the forecast 7.0% growth ranking favourably alongside historical growth of 2.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hengan International Group is expected to grow at about the same rate as 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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at CN¥68.85, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Hengan International Group analysts - going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Hengan International Group that you should be aware of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
