Time To Worry? Analysts Are Downgrading Their Jiumaojiu International Holdings Limited (HKG:9922) Outlook

Today is shaping up negative for Jiumaojiu International Holdings Limited (HKG:9922) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After this downgrade, Jiumaojiu International Holdings' 29 analysts are now forecasting revenues of CN¥6.5b in 2024. This would be a meaningful 9.3% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to crater 45% to CN¥0.18 in the same period. Previously, the analysts had been modelling revenues of CN¥7.4b and earnings per share (EPS) of CN¥0.40 in 2024. Indeed, we can see that the analysts are a lot more bearish about Jiumaojiu International Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Jiumaojiu International Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 29% to CN¥4.70. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Jiumaojiu International Holdings at CN¥9.77 per share, while the most bearish prices it at CN¥2.42. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Jiumaojiu International Holdings' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Jiumaojiu International Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.3% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Jiumaojiu International Holdings.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Jiumaojiu International Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Jiumaojiu International Holdings going out to 2026, and you can see them free on our platform here.

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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.

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