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

Shangri-La Asia Limited (HKG:69) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were in line with forecasts, at US$2.2b, although statutory earnings per share came in 12% below what the analysts expected, at US$0.045 per share. 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.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Taking into account the latest results, the consensus forecast from Shangri-La Asia's three analysts is for revenues of US$2.40b in 2025. This reflects a notable 9.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 21% to US$0.055. Before this earnings report, the analysts had been forecasting revenues of US$2.30b and earnings per share (EPS) of US$0.063 in 2025. While next year's revenue estimates increased, there was also a real cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.

See our latest analysis for Shangri-La Asia

The consensus price target was unchanged at HK$6.15, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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. There are some variant perceptions on Shangri-La Asia, with the most bullish analyst valuing it at HK$6.60 and the most bearish at HK$5.20 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Shangri-La Asia's growth to accelerate, with the forecast 9.8% annualised growth to the end of 2025 ranking favourably alongside historical growth of 7.6% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 11% per year. Shangri-La Asia is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at HK$6.15, with the latest estimates not enough to have an impact on their price targets.

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 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Shangri-La Asia (1 shouldn't be ignored!) that you need to be mindful of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.