Revenue Miss: Henderson Land Development Company Limited Fell 15% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

The analysts might have been a bit too bullish on Henderson Land Development Company Limited (HKG:12), given that the company fell short of expectations when it released its annual results last week. It looks like a weak result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of HK$24b missed by 15%, and statutory earnings per share of HK$2.73 fell short of forecasts by 4.1%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Henderson Land Development

Following the latest results, Henderson Land Development's 14 analysts are now forecasting revenues of HK$31.8b in 2022. This would be a substantial 35% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 9.0% to HK$2.97. Before this earnings report, the analysts had been forecasting revenues of HK$32.6b and earnings per share (EPS) of HK$3.01 in 2022. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of HK$36.73, showing that the analysts don't expect weaker sales expectations next year to have a material impact on Henderson Land Development's market 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. Currently, the most bullish analyst values Henderson Land Development at HK$48.00 per share, while the most bearish prices it at HK$26.30. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. One thing stands out from these estimates, which is that Henderson Land Development is forecast to grow faster in the future than it has in the past, with revenues expected to display 35% annualised growth until the end of 2022. If achieved, this would be a much better result than the 3.3% 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 13% per year. Not only are Henderson Land 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 most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also downgraded their revenue estimates, although industry data suggests that Henderson Land Development's revenues are expected to grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at HK$36.73, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Henderson Land Development analysts - going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Henderson Land Development has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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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.