Shenzhen Overseas Chinese Town Co.,Ltd. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

Investors in Shenzhen Overseas Chinese Town Co.,Ltd. (SZSE:000069) had a good week, as its shares rose 5.2% to close at CN¥2.64 following the release of its quarterly results. Revenues came in 51% better than analyst models predicted, at CN¥8.7b. The company was unable to deliver a profit however, with statutory losses of CN¥0.044 well below the profits that the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Shenzhen Overseas Chinese TownLtd

Taking into account the latest results, the current consensus from Shenzhen Overseas Chinese TownLtd's five analysts is for revenues of CN¥66.7b in 2024. This would reflect a notable 16% increase on its revenue over the past 12 months. Earnings are expected to improve, with Shenzhen Overseas Chinese TownLtd forecast to report a statutory profit of CN¥0.025 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥53.8b and earnings per share (EPS) of CN¥0.22 in 2024. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the large cut to EPS estimates following the latest report.

There's been no major changes to the price target of CN¥3.17, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Shenzhen Overseas Chinese TownLtd at CN¥4.80 per share, while the most bearish prices it at CN¥2.10. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Shenzhen Overseas Chinese TownLtd's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Overseas Chinese TownLtd to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Shenzhen Overseas Chinese TownLtd analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Shenzhen Overseas Chinese TownLtd .

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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.