Swire Pacific Limited (HKG:19) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Investors in Swire Pacific Limited (HKG:19) had a good week, as its shares rose 4.5% to close at HK$69.40 following the release of its half-yearly results. Swire Pacific reported in line with analyst predictions, delivering revenues of HK$40b and statutory earnings per share of HK$2.74, suggesting the business is executing well and in line with its plan. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Swire Pacific

Following the recent earnings report, the consensus from seven analysts covering Swire Pacific is for revenues of HK$78.3b in 2024. This implies a perceptible 5.5% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to dive 71% to HK$5.85 in the same period. Before this earnings report, the analysts had been forecasting revenues of HK$83.4b and earnings per share (EPS) of HK$6.43 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The analysts made no major changes to their price target of HK$74.46, suggesting the downgrades are not expected to have a long-term impact on Swire Pacific's 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. The most optimistic Swire Pacific analyst has a price target of HK$82.00 per share, while the most pessimistic values it at HK$65.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Swire Pacific's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 11% by the end of 2024. This indicates a significant reduction from annual growth of 2.5% 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 2.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Swire Pacific 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 Swire Pacific. 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 HK$74.46, with the latest estimates not enough to have an impact on their price targets.

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 Swire Pacific analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Swire Pacific (at least 1 which is potentially serious) , and understanding these should be part of your investment process.

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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.