Need To Know: The Consensus Just Cut Its China Conch Venture Holdings Limited (HKG:586) Estimates For 2024

The analysts covering China Conch Venture Holdings Limited (HKG:586) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, China Conch Venture Holdings' five analysts are now forecasting revenues of CN¥7.5b in 2024. This would be a decent 11% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 42% to CN¥1.45. Before this latest update, the analysts had been forecasting revenues of CN¥8.3b and earnings per share (EPS) of CN¥1.45 in 2024. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a measurable cut to revenues and reconfirming their earnings per share estimates.

View our latest analysis for China Conch Venture Holdings

The average price target was steady at CN¥9.73 even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. Currently, the most bullish analyst values China Conch Venture Holdings at CN¥14.84 per share, while the most bearish prices it at CN¥6.67. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 11% growth on an annualised basis. That is in line with its 11% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.7% annually. So it's pretty clear that China Conch Venture Holdings is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. 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 Conch Venture Holdings after today.

Uncomfortably, our automated valuation tool also suggests that China Conch Venture Holdings stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. Find out why, and see how we estimate the valuation for free on our platform here.

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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.