Time To Worry? Analysts Just Downgraded Their Powerlong Real Estate Holdings Limited (HKG:1238) Outlook

Today is shaping up negative for Powerlong Real Estate Holdings Limited (HKG:1238) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, Powerlong Real Estate Holdings' five analysts currently expect revenues in 2023 to be CN¥32b, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing CN¥41b of revenue in 2023. It looks like forecasts have become a fair bit less optimistic on Powerlong Real Estate Holdings, given the sizeable cut to revenue estimates.

View our latest analysis for Powerlong Real Estate Holdings

There was no particular change to the consensus price target of CN¥2.40, with Powerlong Real Estate Holdings' latest outlook seemingly not enough to result in a change of valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Powerlong Real Estate Holdings, with the most bullish analyst valuing it at CN¥5.55 and the most bearish at CN¥1.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Powerlong Real Estate Holdings' revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2023 being well below the historical 17% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Powerlong Real Estate Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Powerlong Real Estate Holdings going forwards.

Worse, Powerlong Real Estate Holdings is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. See why we're concerned about Powerlong Real Estate Holdings' balance sheet by visiting our risks dashboard for free on our platform here.

We also provide an overview of the Powerlong Real Estate Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.