Last week, you might have seen that Fu Shou Yuan International Group Limited (HKG:1448) released its yearly result to the market. The early response was not positive, with shares down 5.1% to HK$6.31 in the past week. Fu Shou Yuan International Group missed revenue estimates by 2.4%, with sales of CN¥1.9b, although statutory earnings per share (EPS) of CN¥0.26 beat expectations, coming in 2.8% ahead of analyst estimates. Following the result, 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Fu Shou Yuan International Group's two analysts is for revenues of CN¥2.08b in 2020, which would reflect a solid 12% increase on its sales over the past 12 months. Statutory earnings per share are expected to expand 11% to CN¥0.29. Before this earnings report, analysts had been forecasting revenues of CN¥2.29b and earnings per share (EPS) of CN¥0.33 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share forecasts.
Analysts made no major changes to their price target of CN¥7.44, suggesting the downgrades are not expected to have a long-term impact on Fu Shou Yuan International Group's valuation.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Fu Shou Yuan International Group's performance in recent years. We can infer from the latest estimates that analysts are expecting a continuation of Fu Shou Yuan International Group's historical trends, as next year's forecast 12% revenue growth is roughly in line with 15% annual revenue growth over the past five years. Compare this with the wider market (in aggregate), which analyst estimates suggest will see revenues fall 21% next year. So although Fu Shou Yuan International Group is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Fu Shou Yuan International Group. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
We also provide an overview of the Fu Shou Yuan International Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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