Earnings Miss: Hang Lung Properties Limited Missed EPS By 51% And Analysts Are Revising Their Forecasts

Hang Lung Properties Limited (HKG:101) shareholders are probably feeling a little disappointed, since its shares fell 2.0% to HK$5.38 in the week after its latest half-year results. Statutory earnings per share disappointed, coming in -51% short of expectations, at HK$0.23. Fortunately revenue performance was a lot stronger at HK$6.1b arriving 20% ahead of predictions. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Hang Lung Properties

Taking into account the latest results, the current consensus from Hang Lung Properties' 13 analysts is for revenues of HK$11.6b in 2024. This would reflect a modest 3.4% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 28% to HK$0.71. Before this earnings report, the analysts had been forecasting revenues of HK$11.6b and earnings per share (EPS) of HK$0.95 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

The consensus price target held steady at HK$7.05, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Hang Lung Properties at HK$10.20 per share, while the most bearish prices it at HK$5.30. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Hang Lung Properties' rate of growth is expected to accelerate meaningfully, with the forecast 6.9% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Hang Lung Properties is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hang Lung Properties. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Hang Lung Properties. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Hang Lung Properties going out to 2026, and you can see them free on our platform here..

It is also worth noting that we have found 3 warning signs for Hang Lung Properties (1 is a bit unpleasant!) 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.