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Results: CSPC Pharmaceutical Group Limited Beat Earnings Expectations And Analysts Now Have New Forecasts

Last week, you might have seen that CSPC Pharmaceutical Group Limited (HKG:1093) released its quarterly result to the market. The early response was not positive, with shares down 6.5% to HK$15.20 in the past week. It looks like a credible result overall - although revenues of CN¥5.6b were in line with what the analysts predicted, CSPC Pharmaceutical Group surprised by delivering a statutory profit of CN¥0.17 per share, a notable 15% above expectations. 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.

Check out our latest analysis for CSPC Pharmaceutical Group

SEHK:1093 Past and Future Earnings May 29th 2020
SEHK:1093 Past and Future Earnings May 29th 2020

Taking into account the latest results, the most recent consensus for CSPC Pharmaceutical Group from 26 analysts is for revenues of CN¥25.7b in 2020 which, if met, would be a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to grow 12% to CN¥0.71. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥26.1b and earnings per share (EPS) of CN¥0.71 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

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There were no changes to revenue or earnings estimates or the price target of HK$21.37, suggesting that the company has met expectations in its recent result. 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. Currently, the most bullish analyst values CSPC Pharmaceutical Group at HK$27.20 per share, while the most bearish prices it at HK$17.40. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. We would highlight that CSPC Pharmaceutical Group's revenue growth is expected to slow, with forecast 13% increase next year well below the historical 21%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CSPC Pharmaceutical Group.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that CSPC Pharmaceutical Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at CN¥21.37, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for CSPC Pharmaceutical Group going out to 2024, 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 CSPC Pharmaceutical Group that you should be aware of.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.