New Forecasts: Here's What Analysts Think The Future Holds For China State Construction Development Holdings Limited (HKG:830)

Shareholders in China State Construction Development Holdings Limited (HKG:830) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. The market seems to be pricing in some improvement in the business too, with the stock up 7.5% over the past week, closing at HK$2.15. Could this big upgrade push the stock even higher?

After the upgrade, the three analysts covering China State Construction Development Holdings are now predicting revenues of HK$7.9b in 2022. If met, this would reflect a major 26% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 45% to HK$0.20. Before this latest update, the analysts had been forecasting revenues of HK$6.5b and earnings per share (EPS) of HK$0.18 in 2022. The forecasts seem more optimistic now, with a great increase in revenue and a modest lift to earnings per share estimates.

See our latest analysis for China State Construction Development Holdings

With these upgrades, we're not surprised to see that the analysts have lifted their price target 16% to HK$2.85 per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on China State Construction Development Holdings, with the most bullish analyst valuing it at HK$3.04 and the most bearish at HK$2.70 per share. This is a very narrow spread of estimates, implying either that China State Construction Development Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. It's clear from the latest estimates that China State Construction Development Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 26% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 14% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that China State Construction Development Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at China State Construction Development Holdings.

Better yet, our automated discounted cash flow calculation (DCF) suggests China State Construction Development Holdings could be moderately undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading 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.