Investors in BYD Electronic (International) Company Limited (HKG:285) had a good week, as its shares rose 2.6% to close at HK$16.82 following the release of its yearly results. BYD Electronic (International) missed revenue estimates by 3.8%, with sales of CN¥53b, although statutory earnings per share (EPS) of CN¥0.71 beat expectations, coming in 2.9% ahead of analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from BYD Electronic (International)'s 13 analysts is for revenues of CN¥64.0b in 2020, which would reflect a substantial 21% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 26% to CN¥0.89. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥63.4b and earnings per share (EPS) of CN¥0.88 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 CN¥12.82. 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 BYD Electronic (International), with the most bullish analyst valuing it at CN¥22.42 and the most bearish at CN¥7.23 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the BYD Electronic (International)'s past performance and to peers in the same industry. The analysts are definitely expecting BYD Electronic (International)'sgrowth to accelerate, with the forecast 21% growth ranking favourably alongside historical growth of 15% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect BYD Electronic (International) to grow faster 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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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. At Simply Wall St, we have a full range of analyst estimates for BYD Electronic (International) going out to 2022, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 3 warning signs for BYD Electronic (International) (1 is a bit concerning!) that you should be aware of.
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