One Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163) Analyst Just Cut Their EPS Forecasts

The latest analyst coverage could presage a bad day for Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously. Investors however, have been notably more optimistic about Changsha Broad Homes Industrial Group recently, with the stock price up a notable 13% to HK$9.90 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the latest downgrade, Changsha Broad Homes Industrial Group's one analyst currently expects revenues in 2022 to be CN¥3.1b, approximately in line with the last 12 months. Statutory earnings per share are presumed to leap 155% to CN¥0.17. Prior to this update, the analyst had been forecasting revenues of CN¥3.7b and earnings per share (EPS) of CN¥0.46 in 2022. Indeed, we can see that the analyst is a lot more bearish about Changsha Broad Homes Industrial Group's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Changsha Broad Homes Industrial Group

The consensus price target fell 5.4% to CN¥6.49, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Changsha Broad Homes Industrial Group's revenue growth is expected to slow, with the forecast 1.0% annualised growth rate until the end of 2022 being well below the historical 9.5% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it seems obvious that Changsha Broad Homes Industrial Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Changsha Broad Homes Industrial Group. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Changsha Broad Homes Industrial Group.

That said, the covering analyst might have good reason to be negative on Changsha Broad Homes Industrial Group, given its declining profit margins. For more information, you can click here to discover this and the 2 other flags we've identified.

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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.