Shangri-La Asia Limited Just Missed Earnings - But Analysts Have Updated Their Models

Last week, you might have seen that Shangri-La Asia Limited (HKG:69) released its full-year result to the market. The early response was not positive, with shares down 3.5% to HK$4.91 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$2.1b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 23% to hit US$0.051 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 consensus forecast from Shangri-La Asia's six analysts is for revenues of US$2.34b in 2024. This reflects a notable 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 18% to US$0.061. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.38b and earnings per share (EPS) of US$0.07 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target fell 8.2% to HK$7.79, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Shangri-La Asia, with the most bullish analyst valuing it at HK$8.61 and the most bearish at HK$6.70 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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 Shangri-La Asia's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Shangri-La Asia is forecast to grow faster in the future than it has in the past, with revenues expected to display 9.4% annualised growth until the end of 2024. If achieved, this would be a much better result than the 9.1% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually for the foreseeable future. So although Shangri-La Asia's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shangri-La Asia. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Shangri-La Asia analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Shangri-La Asia 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.