Analyst Forecasts Just Became More Bearish On Sinotruk (Hong Kong) Limited (HKG:3808)

Market forces rained on the parade of Sinotruk (Hong Kong) Limited (HKG:3808) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following this downgrade, Sinotruk (Hong Kong)'s eleven analysts are forecasting 2022 revenues to be CN¥58b, approximately in line with the last 12 months. Statutory earnings per share are presumed to surge 45% to CN¥1.04. Previously, the analysts had been modelling revenues of CN¥65b and earnings per share (EPS) of CN¥1.15 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

Check out our latest analysis for Sinotruk (Hong Kong)

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Sinotruk (Hong Kong)'s revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 3.9% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sinotruk (Hong Kong).

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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sinotruk (Hong Kong)'s revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Sinotruk (Hong Kong) going forwards.

That said, the analysts might have good reason to be negative on Sinotruk (Hong Kong), given its declining profit margins. For more information, you can click here to discover this and the 2 other concerns we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.