Investors in China Telecom Corporation Limited (HKG: 728) had a good week as its shares rose 7.6% to close at HK $ 2.55 following the release of its third quarter results. It was a decent report, and earnings rose to CN ¥ 99b, roughly in line with analysts’ estimates leading up to the earnings announcement. This is an important time for investors, as they can follow a company’s performance in its report, examine experts’ forecasts for next year, and see if there has been a change in the expectations of the company. business. So we’ve collected the latest post-profit statutory consensus estimates to see what might be in store for next year.
See our latest analysis for China Telecom
Based on the latest results, the most recent consensus for China Telecom of 21 analysts is revenue of 405.6 billion yen in 2021 which, if achieved, would represent a reasonable increase of 5.2% from its sales over the past 12 months. Statutory earnings per share are expected to increase 12% to 0.28 CN. Prior to this earnings report, analysts were forecasting revenues of CN 404.2 billion and earnings per share (EPS) of CN 0.28 in 2021. So it’s pretty clear that although analysts have updated their estimates, there has been no major change in the company’s expectations as a result of the latest results.
There has been no change in revenue or profit estimates or the CN ¥ 3.15 price target, suggesting that the company has lived up to expectations in its recent result. There is another way to think about price targets, however, and that is to look at the range of price targets offered by analysts, as a wide range of estimates might suggest a different view of the possible outcomes for the market. business. Currently, the most bullish analyst values China Telecom at CN 5.12 per share, while the most bearish price at CN 2.47. This is a fairly wide range of estimates, suggesting that analysts are predicting a wide range of possible outcomes for the business.
These estimates are interesting, but it may be useful to paint a few broader strokes when comparing the forecasts, both to China Telecom’s past performance and to that of its peers in the same industry. Analysts are certainly expecting growth from China Telecom to accelerate, with expected growth of 5.2% ranking favorably against the historic growth of 2.8% per year over the past five years. Compare that with other companies in the same industry, which are expected to increase their revenues by 4.6% next year. China Telecom is expected to grow at roughly the same rate as its industry, so it is not clear that we can draw any conclusions from its growth relative to its competitors.
The bottom line
The most obvious conclusion is that there has been no major change in the outlook for the company lately, with analysts keeping their earnings forecasts stable, in line with previous estimates. Fortunately, there has been no real change in the sales forecast, with activity still expected to grow in line with the industry as a whole. There has been no real change to the consensus price target, suggesting that the intrinsic value of the company has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to draw a conclusion on China Telecom. Long-term earning power is much more important than next year’s profits. We have estimates – from several analysts at China Telecom – up to 2024, and you can see them for free on our platform here.
We don’t want to rain too much on the parade, but we also found 1 warning sign for China Telecom that you need to be aware of.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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