Earnings Report: Sun Hung Kai Properties Limited Missed Revenue Estimates By 8.2%

The analysts might have been a bit too bullish on Sun Hung Kai Properties Limited (HKG:16), given that the company fell short of expectations when it released its half-year results last week. Results look to have been somewhat negative - revenue fell 8.2% short of analyst estimates at HK$28b, and statutory earnings of HK$3.16 per share missed forecasts by 5.7%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sun Hung Kai Properties after the latest results.

See our latest analysis for Sun Hung Kai Properties

Taking into account the latest results, the current consensus from Sun Hung Kai Properties' 14 analysts is for revenues of HK$75.6b in 2024. This would reflect an okay 6.1% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to decrease 4.4% to HK$8.13 in the same period. In the lead-up to this report, the analysts had been modelling revenues of HK$79.2b and earnings per share (EPS) of HK$8.54 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

The consensus price target fell 5.3% to HK$91.02, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values Sun Hung Kai Properties at HK$115 per share, while the most bearish prices it at HK$70.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Sun Hung Kai Properties shareholders.

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. For example, we noticed that Sun Hung Kai Properties' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 12% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 3.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.8% per year. Not only are Sun Hung Kai Properties' revenues expected to improve, it seems that the analysts are also expecting it 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 Sun Hung Kai Properties. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Sun Hung Kai Properties going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Sun Hung Kai Properties' balance sheet, and whether we think Sun Hung Kai Properties is carrying too much debt, for free on our platform 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.