Results: IGG Inc Exceeded Expectations And The Consensus Has Updated Its Estimates

IGG Inc (HKG:799) shareholders are probably feeling a little disappointed, since its shares fell 3.6% to HK$11.16 in the week after its latest annual results. Revenues of HK$625m fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of HK$0.22 an impressive 25% ahead of estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for IGG

Following the latest results, IGG's eight analysts are now forecasting revenues of HK$6.08b in 2021. This would be a major 872% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 522% to HK$1.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$749.0m and earnings per share (EPS) of HK$0.15 in 2021. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.

Despite these upgrades,the analysts have not made any major changes to their price target of US$1.46, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic IGG analyst has a price target of US$17.20 per share, while the most pessimistic values it at US$8.01. 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. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that IGG is forecast to grow faster in the future than it has in the past, with revenues expected to display 9x annualised growth until the end of 2021. If achieved, this would be a much better result than the 13% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 25% per year. So it looks like IGG is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards IGG following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at HK$1.46, with the latest estimates not enough to have an impact on their price targets.

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 IGG analysts - going out to 2023, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for IGG that we have uncovered.

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