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Dongfang Electric Corporation Limited Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected
Dongfang Electric Corporation Limited (HKG:1072) shareholders are probably feeling a little disappointed, since its shares fell 2.5% to HK$15.56 in the week after its latest third-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥18b, statutory earnings were in line with expectations, at CN¥1.15 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Dongfang Electric after the latest results.
Following the latest results, Dongfang Electric's twelve analysts are now forecasting revenues of CN¥90.3b in 2027. This would be a meaningful 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to ascend 11% to CN¥1.51. In the lead-up to this report, the analysts had been modelling revenues of CN¥90.6b and earnings per share (EPS) of CN¥1.54 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
See our latest analysis for Dongfang Electric
The consensus price target fell 8.8% to HK$30.99, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. 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 Dongfang Electric at HK$48.29 per share, while the most bearish prices it at HK$17.14. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dongfang Electric's past performance and to peers in the same industry. The period to the end of 2027 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 12% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 14% per year. It's clear that while Dongfang Electric's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Dongfang Electric's future valuation.
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 estimates - from multiple Dongfang Electric analysts - going out to 2028, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Dongfang Electric (1 doesn't sit too well with us!) that we have uncovered.
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