Analysts Are More Bearish On Man Wah Holdings Limited (HKG:1999) Than They Used To Be

The analysts covering Man Wah Holdings Limited (HKG:1999) 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.

Following the downgrade, the current consensus from Man Wah Holdings' ten analysts is for revenues of HK$19b in 2024 which - if met - would reflect a meaningful 12% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 27% to HK$0.62. Prior to this update, the analysts had been forecasting revenues of HK$22b and earnings per share (EPS) of HK$0.72 in 2024. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a considerable drop in earnings per share numbers as well.

See our latest analysis for Man Wah Holdings

The consensus price target fell 8.8% to HK$8.64, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Man Wah Holdings analyst has a price target of HK$11.40 per share, while the most pessimistic values it at HK$6.90. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Man Wah Holdings' revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. Compare this to the 40 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it looks like Man Wah Holdings is forecast to grow at about the same rate as the wider industry.

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 Man Wah Holdings. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Man Wah Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Man Wah Holdings analysts - going out to 2026, 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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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.