Earnings Update: New World Development Company Limited (HKG:17) Just Reported And Analysts Are Trimming Their Forecasts

New World Development Company Limited (HKG:17) just released its latest yearly report and things are not looking great. Unfortunately, New World Development delivered a serious earnings miss. Revenues of HK$28b were 15% below expectations, and statutory losses ballooned 190% to HK$6.82 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from New World Development's eight analysts is for revenues of HK$29.7b in 2026. This reflects a reasonable 7.4% improvement in revenue compared to the last 12 months. Per-share statutory losses are expected to explode, reaching HK$0.88 per share. In the lead-up to this report, the analysts had been modelling revenues of HK$35.6b and earnings per share (EPS) of HK$0.10 in 2026. There looks to have been a major change in sentiment regarding New World Development's prospects following the latest results, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for New World Development

The analysts lifted their price target 8.5% to HK$5.18, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic New World Development analyst has a price target of HK$11.00 per share, while the most pessimistic values it at HK$2.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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. One thing stands out from these estimates, which is that New World Development is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.4% annualised growth until the end of 2026. If achieved, this would be a much better result than the 12% annual decline 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 3.2% per year. Not only are New World Development's 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 low-light for us was that the forecasts for New World Development dropped from profits to a loss next year. They also downgraded New World Development's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on New World Development. 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 New World Development going out to 2028, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for New World Development that you need to be mindful of.

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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.