China SCE Group Holdings Limited (HKG:1966) Analysts Just Slashed This Year's Estimates

The latest analyst coverage could presage a bad day for China SCE Group Holdings Limited (HKG:1966), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the five analysts covering China SCE Group Holdings provided consensus estimates of CN¥22b revenue in 2023, which would reflect a chunky 19% decline on its sales over the past 12 months. Per-share earnings are expected to jump 5,331% to CN¥0.32. Previously, the analysts had been modelling revenues of CN¥36b and earnings per share (EPS) of CN¥0.37 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a real cut to earnings per share numbers as well.

Check out our latest analysis for China SCE Group Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 37% to CN¥0.80. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values China SCE Group Holdings at CN¥1.69 per share, while the most bearish prices it at CN¥0.28. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. We would highlight that sales are expected to reverse, with a forecast 19% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.9% per year. It's pretty clear that China SCE Group Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that China SCE Group Holdings' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

That said, the analysts might have good reason to be negative on China SCE Group Holdings, given its declining profit margins. For more information, you can click here to discover this and the 2 other risks we've identified.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.