MMG Limited Just Missed Earnings - But Analysts Have Updated Their Models

It's been a good week for MMG Limited (HKG:1208) shareholders, because the company has just released its latest yearly results, and the shares gained 9.8% to HK$2.58. It was not a great result overall. While revenues of US$4.5b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 18% to hit US$0.015 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 MMG

Taking into account the latest results, the consensus forecast from MMG's nine analysts is for revenues of US$5.58b in 2025. This reflects a huge 25% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 180% to US$0.037. Before this earnings report, the analysts had been forecasting revenues of US$5.82b and earnings per share (EPS) of US$0.046 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the HK$3.37 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic MMG analyst has a price target of HK$5.00 per share, while the most pessimistic values it at HK$2.42. 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.

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. It's clear from the latest estimates that MMG's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 7.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect MMG to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for MMG. They also downgraded MMG's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for MMG going out to 2027, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for MMG (1 is potentially serious!) that you need to take into consideration.

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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.