Earnings Update: Nayuki Holdings Limited (HKG:2150) Just Reported And Analysts Are Trimming Their Forecasts

As you might know, Nayuki Holdings Limited (HKG:2150) last week released its latest full-year, and things did not turn out so great for shareholders. It was a pretty negative result overall, with revenues of CN¥4.3b missing analyst predictions by 3.8%. Worse, the business reported a statutory loss of CN¥3.28 per share, much larger than the analysts had forecast prior to the result. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Nayuki Holdings after the latest results.

See our latest analysis for Nayuki Holdings

Taking into account the latest results, the most recent consensus for Nayuki Holdings from nine analysts is for revenues of CN¥6.12b in 2022 which, if met, would be a huge 42% increase on its sales over the past 12 months. Earnings are expected to improve, with Nayuki Holdings forecast to report a statutory profit of CN¥0.07 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥6.99b and earnings per share (EPS) of CN¥0.17 in 2022. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 23% to HK$9.41. 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 Nayuki Holdings at HK$15.13 per share, while the most bearish prices it at HK$5.70. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nayuki Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that Nayuki Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 42% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 34% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 26% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Nayuki Holdings to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Nayuki Holdings. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Nayuki Holdings analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Nayuki Holdings that you should be aware of.

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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.