Newsflash: Guangdong Tapai Group Co., Ltd. (SZSE:002233) Analysts Have Been Trimming Their Revenue Forecasts

The latest analyst coverage could presage a bad day for Guangdong Tapai Group Co., Ltd. (SZSE:002233), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 5.4% to CN¥7.46 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Guangdong Tapai Group's three analysts are now forecasting revenues of CN¥5.0b in 2024. This would be a satisfactory 7.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 47% to CN¥0.63. Before this latest update, the analysts had been forecasting revenues of CN¥5.5b and earnings per share (EPS) of CN¥0.69 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for Guangdong Tapai Group

Analysts made no major changes to their price target of CN¥8.60, suggesting the downgrades are not expected to have a long-term impact on Guangdong Tapai Group's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Guangdong Tapai Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.2% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.9% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.0% annually. So while Guangdong Tapai Group's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall 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 Guangdong Tapai Group. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Given the stark change in sentiment, we'd understand if investors became more cautious on Guangdong Tapai Group after today.

Worse yet, our risk analysis suggests that Guangdong Tapai Group may find it hard to maintain its dividend following these downgrades. For more information, you can click here to learn more about our dividend analysis and the 1 potential concern we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.

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