Stock Analysis

Q Technology (Group) Company Limited (HKG:1478) Analysts Are More Bearish Than They Used To Be

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The analysts covering Q Technology (Group) Company Limited (HKG:1478) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the 13 analysts covering Q Technology (Group) are now predicting revenues of CN¥14b in 2023. If met, this would reflect an okay 3.4% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 82% to CN¥0.26. Before this latest update, the analysts had been forecasting revenues of CN¥16b and earnings per share (EPS) of CN¥0.47 in 2023. Indeed, we can see that the analysts are a lot more bearish about Q Technology (Group)'s prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Q Technology (Group)

SEHK:1478 Earnings and Revenue Growth March 14th 2023

Analysts made no major changes to their price target of CN¥4.69, suggesting the downgrades are not expected to have a long-term impact on Q Technology (Group)'s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Q Technology (Group) at CN¥7.25 per share, while the most bearish prices it at CN¥4.04. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Q Technology (Group)'s revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2023 being well below the historical 17% p.a. growth over the last 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. Factoring in the forecast slowdown in growth, it seems obvious that Q Technology (Group) is also expected to grow slower than other industry participants.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Q Technology (Group). Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Q Technology (Group)'s revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Q Technology (Group).

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Q Technology (Group) going out to 2025, and you can see them free 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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