China Vanke Co., Ltd. Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

Shareholders of China Vanke Co., Ltd. (SZSE:000002) will be pleased this week, given that the stock price is up 13% to CN¥7.41 following its latest first-quarter results. The results don't look great, especially considering that the analysts had been forecasting a profit and China Vanke delivered a statutory loss of CN¥0.03 per share. Revenues of CN¥62b did beat expectations by 2.2% though. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on China Vanke after the latest results.

View our latest analysis for China Vanke

Taking into account the latest results, the 19 analysts covering China Vanke provided consensus estimates of CN¥356.9b revenue in 2024, which would reflect a substantial 22% decline over the past 12 months. Statutory earnings per share are forecast to crater 23% to CN¥0.67 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CN¥377.7b and earnings per share (EPS) of CN¥0.87 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

The consensus price target fell 7.2% to CN¥8.36, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values China Vanke at CN¥17.31 per share, while the most bearish prices it at CN¥3.20. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 28% annualised decline to the end of 2024. That is a notable change from historical growth of 8.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.0% annually for the foreseeable future. It's pretty clear that China Vanke's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for China Vanke. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than 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 China Vanke'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 China Vanke analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for China Vanke (1 doesn't sit too well with us!) that you should be aware of.

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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.