Shenzhen Overseas Chinese Town Co.,Ltd. (SZSE:000069) Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year

Investors in Shenzhen Overseas Chinese Town Co.,Ltd. (SZSE:000069) had a good week, as its shares rose 5.5% to close at CN¥1.92 following the release of its second-quarter results. Revenue greatly exceeded expectations at CN¥14b, some 40% ahead of analyst forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Shenzhen Overseas Chinese TownLtd

Taking into account the latest results, the three analysts covering Shenzhen Overseas Chinese TownLtd provided consensus estimates of CN¥49.2b revenue in 2024, which would reflect an uncomfortable 17% decline 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. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥51.2b and earnings per share (EPS) of CN¥0.22 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a large cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the CN¥2.68 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Shenzhen Overseas Chinese TownLtd, with the most bullish analyst valuing it at CN¥3.10 and the most bearish at CN¥2.23 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.

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 31% annualised decline to the end of 2024. That is a notable change from historical growth of 3.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shenzhen Overseas Chinese TownLtd is expected to lag 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 Shenzhen Overseas Chinese TownLtd. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at CN¥2.68, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Shenzhen Overseas Chinese TownLtd. Long-term earnings power is much more important than next year's profits. We have forecasts for Shenzhen Overseas Chinese TownLtd going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Shenzhen Overseas Chinese TownLtd has 1 warning sign we think 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.