Time To Worry? Analysts Just Downgraded Their China Tourism Group Duty Free Corporation Limited (SHSE:601888) Outlook

One thing we could say about the analysts on China Tourism Group Duty Free Corporation Limited (SHSE:601888) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about China Tourism Group Duty Free recently, with the stock price up a worthy 11% to CN¥70.51 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the most recent consensus for China Tourism Group Duty Free from its 32 analysts is for revenues of CN¥67b in 2024 which, if met, would be a credible 7.0% increase on its sales over the past 12 months. Per-share earnings are expected to climb 17% to CN¥3.47. Previously, the analysts had been modelling revenues of CN¥76b and earnings per share (EPS) of CN¥3.76 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.

Check out our latest analysis for China Tourism Group Duty Free

It'll come as no surprise then, to learn that the analysts have cut their price target 6.1% to CN¥89.85.

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. The analysts are definitely expecting China Tourism Group Duty Free's growth to accelerate, with the forecast 14% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.5% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 14% per year. China Tourism Group Duty Free is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on China Tourism Group Duty Free after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple China Tourism Group Duty Free analysts - going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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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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