What You Need To Know About The China Jinmao Holdings Group Limited (HKG:817) Analyst Downgrade Today

Market forces rained on the parade of China Jinmao Holdings Group Limited (HKG:817) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At HK$1.59, shares are up 6.7% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from twelve analysts covering China Jinmao Holdings Group is for revenues of CN¥79b in 2023, implying an uncomfortable 12% decline in sales compared to the last 12 months. Per-share earnings are expected to surge 70% to CN¥0.38. Prior to this update, the analysts had been forecasting revenues of CN¥89b and earnings per share (EPS) of CN¥0.39 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

See our latest analysis for China Jinmao Holdings Group

Despite the cuts to forecast earnings, there was no real change to the HK$2.34 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 China Jinmao Holdings Group, with the most bullish analyst valuing it at HK$3.00 and the most bearish at HK$1.40 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 12% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 24% 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 9.4% per year. It's pretty clear that China Jinmao Holdings Group's 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on China Jinmao Holdings Group after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with China Jinmao Holdings Group, including its declining profit margins. Learn more, and discover the 3 other warning signs we've identified, for 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.

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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.