It's been a pretty great week for China Kepei Education Group Limited (HKG:1890) shareholders, with its shares surging 15% to HK$4.05 in the week since its latest yearly results. It was an okay result overall, with revenues coming in at CN¥714m, roughly what the analysts had been expecting. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on China Kepei Education Group after the latest results.
Taking into account the latest results, the most recent consensus for China Kepei Education Group from twin analysts is for revenues of CN¥868.0m in 2020 which, if met, would be a huge 22% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 42% to CN¥0.33. In the lead-up to this report, the analysts had been modelling revenues of CN¥845.5m and earnings per share (EPS) of CN¥0.24 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable lift to earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of CN¥4.77, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the China Kepei Education Group's past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 22%, in line with its 22% annual growth over the past three years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 21% next year. It's clear that while China Kepei Education Group's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards China Kepei Education Group following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.
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. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for China Kepei Education Group you should be aware of.
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