Some Yunkang Group Limited (HKG:2325) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Yunkang Group Limited (HKG:2325), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Yunkang Group's twin analysts is for revenues of CN¥976m in 2024, which would reflect a notable 9.5% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 64% to CN¥0.06 per share. Prior to this update, the analysts had been forecasting revenues of CN¥1.3b and earnings per share (EPS) of CN¥0.20 in 2024. So we can see that the consensus has become notably more bearish on Yunkang Group's outlook with these numbers, making a sizeable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Yunkang Group

The consensus price target fell 13% to CN¥13.46, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on Yunkang Group, with the most bullish analyst valuing it at CN¥14.82 and the most bearish at CN¥12.10 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Yunkang Group's revenue growth is expected to slow, with the forecast 9.5% annualised growth rate until the end of 2024 being well below the historical 21% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% 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 Yunkang Group.

The Bottom Line

The biggest low-light for us was that the forecasts for Yunkang Group dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Yunkang Group's revenues are expected to grow 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. We have analyst estimates for Yunkang Group going out as far as 2026, and you can see them 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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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.