Last week saw the newest interim earnings release from China Resources Land Limited (HKG:1109), an important milestone in the company’s journey to build a stronger business. Revenues were CN¥46b, 25% shy of what the analysts were expecting, although statutory earnings of CN¥4.02 per share were roughly in line with what was forecast. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for China Resources Land from 24 analysts is for revenues of CN¥172.9b in 2020 which, if met, would be a solid 18% increase on its sales over the past 12 months. Statutory earnings per share are forecast to dip 2.8% to CN¥3.78 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥172.8b and earnings per share (EPS) of CN¥3.78 in 2020. 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at HK$43.43. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on China Resources Land, with the most bullish analyst valuing it at HK$51.70 and the most bearish at HK$33.00 per share. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting China Resources Land’s growth to accelerate, with the forecast 18% growth ranking favourably alongside historical growth of 12% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that China Resources Land is expected to grow at about the same rate as the wider industry.
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 held steady at CN¥43.43, 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 estimates – from multiple China Resources Land analysts – going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for China Resources Land (1 is concerning!) that we have uncovered.
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