Haidilao International Holding Ltd. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's shaping up to be a tough period for Haidilao International Holding Ltd. (HKG:6862), which a week ago released some disappointing annual results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with CN¥29b revenue coming in 2.4% lower than what the analystsexpected. Statutory earnings per share (EPS) of CN¥0.06 missed the mark badly, arriving some 48% below what was expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Haidilao International Holding

Following the latest results, Haidilao International Holding's 21 analysts are now forecasting revenues of CN¥51.6b in 2021. This would be a huge 80% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 1,180% to CN¥0.75. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥52.8b and earnings per share (EPS) of CN¥0.83 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The analysts made no major changes to their price target of CN¥50.66, suggesting the downgrades are not expected to have a long-term impact on Haidilao International Holding'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. There are some variant perceptions on Haidilao International Holding, with the most bullish analyst valuing it at CN¥92.61 and the most bearish at CN¥34.96 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Haidilao International Holding's growth to accelerate, with the forecast 80% annualised growth to the end of 2021 ranking favourably alongside historical growth of 28% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 39% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Haidilao International Holding 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. They also downgraded their revenue estimates, although industry data suggests that Haidilao International Holding's revenues are expected to grow faster than the wider industry. The consensus price target held steady at CN¥50.66, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Haidilao International Holding analysts - going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for Haidilao International Holding you should be aware of.

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