ZhongAn Online P & C Insurance Co., Ltd. (HKG:6060) just released its yearly report and things are looking bullish. It looks like a positive result overall, with revenues of CN¥15b beating forecasts by 8.1%. Statutory losses of CN¥0.31 per share were 8.1% smaller than the analysts expected, likely helped along by the higher revenues. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from ZhongAn Online P & C Insurance's 14 analysts is for revenues of CN¥18.3b in 2020, which would reflect a major 21% improvement in sales compared to the last 12 months. Earnings are expected to improve, with ZhongAn Online P & C Insurance forecast to report a statutory profit of CN¥0.08 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥17.7b and earnings per share (EPS) of CN¥0.23 in 2020. So it's pretty clear the analysts have mixed opinions on ZhongAn Online P & C Insurance after the latest results; even though they upped their revenue numbers, it came at the cost of a large cut to per-share earnings expectations.
There's been no major changes to the price target of CN¥24.06, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on ZhongAn Online P & C Insurance, with the most bullish analyst valuing it at CN¥33.83 and the most bearish at CN¥18.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that ZhongAn Online P & C Insurance's revenue growth will slow down substantially, with revenues next year expected to grow 21%, compared to a historical growth rate of 40% over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 0.9% next year. Factoring in the forecast slowdown in growth, it's pretty clear that ZhongAn Online P & C Insurance is still expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider industry. The consensus price target held steady at CN¥24.06, 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. At Simply Wall St, we have a full range of analyst estimates for ZhongAn Online P & C Insurance going out to 2022, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for ZhongAn Online P & C Insurance that you should be aware of.
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