Shangri-La Asia Limited (HKG:69) Analysts Just Slashed This Year's Revenue Estimates By 11%

Today is shaping up negative for Shangri-La Asia Limited (HKG:69) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the most recent consensus for Shangri-La Asia from its four analysts is for revenues of US$1.6b in 2022 which, if met, would be a substantial 25% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$1.7b of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Shangri-La Asia, given the measurable cut to revenue estimates.

View our latest analysis for Shangri-La Asia

We'd point out that there was no major changes to their price target of US$0.93, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Shangri-La Asia analyst has a price target of US$8.21 per share, while the most pessimistic values it at US$6.61. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on 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. For example, we noticed that Shangri-La Asia's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 25% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 12% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 26% per year. So it looks like Shangri-La Asia is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting for revenues to grow at about the same rate as companies in the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Shangri-La Asia after today.

Of course, this isn't the full story. At least one of Shangri-La Asia's four analysts has provided estimates out to 2024, which can be seen for 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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