Last week, you might have seen that ENN Energy Holdings Limited (HKG:2688) released its interim result to the market. The early response was not positive, with shares down 2.4% to HK$54.00 in the past week. ENN Energy Holdings reported in line with analyst predictions, delivering revenues of CN¥55b and statutory earnings per share of CN¥6.04, suggesting the business is executing well and in line with its plan. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for ENN Energy Holdings
Taking into account the latest results, ENN Energy Holdings' 21 analysts currently expect revenues in 2024 to be CN¥115.8b, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 8.9% to CN¥5.87. Before this earnings report, the analysts had been forecasting revenues of CN¥117.4b and earnings per share (EPS) of CN¥6.34 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target fell 7.1% to HK$68.85, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on ENN Energy Holdings, with the most bullish analyst valuing it at HK$79.04 and the most bearish at HK$58.03 per share. 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 ENN Energy Holdings shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that ENN Energy Holdings' revenue growth is expected to slow, with the forecast 2.6% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% per 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 ENN Energy Holdings.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ENN Energy Holdings. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on ENN Energy Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for ENN Energy Holdings going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - ENN Energy Holdings has 1 warning sign we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.