Stock Analysis

Best Pacific International Holdings Limited (HKG:2111) Analysts Are More Bearish Than They Used To Be

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The latest analyst coverage could presage a bad day for Best Pacific International Holdings Limited (HKG:2111), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following this downgrade, Best Pacific International Holdings' dual analysts are forecasting 2023 revenues to be HK$4.6b, approximately in line with the last 12 months. Statutory earnings per share are presumed to accumulate 4.3% to HK$0.30. Before this latest update, the analysts had been forecasting revenues of HK$5.8b and earnings per share (EPS) of HK$0.48 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a large cut to earnings per share numbers as well.

View our latest analysis for Best Pacific International Holdings

SEHK:2111 Earnings and Revenue Growth April 2nd 2023

The consensus price target fell 17% to HK$1.87, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Best Pacific International Holdings, with the most bullish analyst valuing it at HK$2.50 and the most bearish at HK$1.24 per share. 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 Best Pacific International Holdings' revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2023 being well below the historical 11% 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. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Best Pacific International Holdings.

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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Best Pacific International Holdings.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Best Pacific International Holdings could now be moderately overvalued. You can learn more about our valuation methodology for free on our platform here.

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Find out whether Best Pacific International Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.