As you might know, Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6) last week released its latest quarterly, and things did not turn out so great for shareholders. It looks like a clear earnings miss, with both revenues and earnings falling well short of analyst predictions. Revenues of CN¥3.5b missed by 12%, and statutory earnings per share of CN¥0.10 fell short of forecasts by 13%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Yangzijiang Shipbuilding (Holdings)
SGX:BS6 Past and Future Earnings May 1st 2020
Following the latest results, Yangzijiang Shipbuilding (Holdings)’s nine analysts are now forecasting revenues of CN¥22.7b in 2020. This would be a meaningful 9.4% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decline 14% to CN¥0.68 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥21.7b and earnings per share (EPS) of CN¥0.71 in 2020. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a meaningful to revenue, the consensus also made a minor downgrade to to its earnings per share forecasts.
The consensus price target was unchanged at CN¥6.18, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. Currently, the most bullish analyst values Yangzijiang Shipbuilding (Holdings) at CN¥7.67 per share, while the most bearish prices it at CN¥4.12. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Yangzijiang Shipbuilding (Holdings) shareholders.
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. We can infer from the latest estimates that forecasts expect a continuation of Yangzijiang Shipbuilding (Holdings)’shistorical trends, as next year’s 9.4% revenue growth is roughly in line with 11% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 2.7% next year. So it’s clear that not only is revenue growth expected to be maintained, but Yangzijiang Shipbuilding (Holdings) is expected to grow meaningfully 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. Fortunately, they also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider industry. The consensus price target held steady at CN¥6.18, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Yangzijiang Shipbuilding (Holdings). Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Yangzijiang Shipbuilding (Holdings) analysts – 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 Yangzijiang Shipbuilding (Holdings) that you should be aware of.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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.
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