Market forces rained on the parade of Anhui Conch Cement Company Limited (HKG:914) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the 14 analysts covering Anhui Conch Cement provided consensus estimates of CN¥101b revenue in 2024, which would reflect a considerable 8.4% decline on its sales over the past 12 months. Per-share earnings are expected to soar 28% to CN¥1.76. Before this latest update, the analysts had been forecasting revenues of CN¥119b and earnings per share (EPS) of CN¥1.79 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a substantial drop in revenue estimates and a small dip in earnings per share numbers as well.
See our latest analysis for Anhui Conch Cement
Despite the cuts to forecast earnings, there was no real change to the CN¥22.50 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. The most optimistic Anhui Conch Cement analyst has a price target of CN¥29.33 per share, while the most pessimistic values it at CN¥14.61. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Anhui Conch Cement's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Anhui Conch Cement's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 16% to the end of 2024. This tops off a historical decline of 6.5% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.5% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Anhui Conch Cement to suffer worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Anhui Conch Cement. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Anhui Conch Cement after today.
Still, 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 Anhui Conch Cement going out to 2026, and you can see them free on our platform here.
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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.