This Shanghai Industrial Holdings Limited (HKG:363) Analyst Is Way More Bearish Than They Used To Be

Today is shaping up negative for Shanghai Industrial Holdings Limited (HKG:363) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the current consensus from Shanghai Industrial Holdings' solo analyst is for revenues of HK$35b in 2023 which - if met - would reflect a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are presumed to soar 42% to HK$3.02. Previously, the analyst had been modelling revenues of HK$40b and earnings per share (EPS) of HK$3.40 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for Shanghai Industrial Holdings

The average price target climbed 8.7% to HK$13.75 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

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 analyst is definitely expecting Shanghai Industrial Holdings' growth to accelerate, with the forecast 13% annualised growth to the end of 2023 ranking favourably alongside historical growth of 2.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 0.2% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shanghai Industrial Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Shanghai Industrial Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for 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 that insiders are buying.

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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.