Earnings Update: Shangri-La Asia Limited (HKG:69) Just Reported And Analysts Are Trimming Their Forecasts

It's shaping up to be a tough period for Shangri-La Asia Limited (HKG:69), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It was a pretty negative result overall, with revenues of US$1.0b missing analyst predictions by 7.6%. Additionally, the business reported a statutory loss of US$0.13 per share, larger than the analysts had forecast prior to the result. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Shangri-La Asia

Taking into account the latest results, the most recent consensus for Shangri-La Asia from three analysts is for revenues of US$1.57b in 2021 which, if met, would be a sizeable 52% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 77% to US$0.03. Before this latest report, the consensus had been expecting revenues of US$1.97b and US$0.0064 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The analysts lifted their price target 13% to US$1.15, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Shangri-La Asia analyst has a price target of US$9.20 per share, while the most pessimistic values it at US$8.60. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Shangri-La Asia's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 52% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 3.1% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 37% per year. So it looks like Shangri-La Asia is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Shangri-La Asia's revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Shangri-La Asia analysts - going out to 2023, and you can see them free on our platform here.

You still need to take note of risks, for example - Shangri-La Asia has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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