Need To Know: The Consensus Just Cut Its Guangzhou R&F Properties Co., Ltd. (HKG:2777) Estimates For 2023

The analysts covering Guangzhou R&F Properties Co., Ltd. (HKG:2777) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from Guangzhou R&F Properties' five analysts is for revenues of CN¥38b in 2023, which would reflect a notable 8.9% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 72% to CN¥1.19. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥55b and losses of CN¥1.11 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Guangzhou R&F Properties

The consensus price target fell 29% to CN¥1.31, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Guangzhou R&F Properties analyst has a price target of CN¥1.90 per share, while the most pessimistic values it at CN¥1.25. 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 Guangzhou R&F Properties shareholders.

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 Guangzhou R&F Properties is forecast to grow faster in the future than it has in the past, with revenues expected to display 8.9% annualised growth until the end of 2023. If achieved, this would be a much better result than the 3.5% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.8% per year. So while Guangzhou R&F Properties' revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Guangzhou R&F Properties' future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Guangzhou R&F Properties going forwards.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Guangzhou R&F Properties going out to 2025, and you can see them free on our platform here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.