Some Times China Holdings Limited (HKG:1233) Analysts Just Made A Major Cut To Next Year's Estimates

One thing we could say about the analysts on Times China Holdings Limited (HKG:1233) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from Times China Holdings' twelve analysts is for revenues of CN¥48b in 2021 which - if met - would reflect a substantial 24% increase on its sales over the past 12 months. Statutory earnings per share are presumed to ascend 12% to CN¥2.85. Previously, the analysts had been modelling revenues of CN¥56b and earnings per share (EPS) of CN¥3.25 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Times China Holdings

Despite the cuts to forecast earnings, there was no real change to the CN¥11.73 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Times China Holdings at CN¥17.93 per share, while the most bearish prices it at CN¥10.37. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Times China Holdings'historical trends, as the 24% annualised revenue growth to the end of 2021 is roughly in line with the 25% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. So although Times China Holdings is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Times China Holdings. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Times China Holdings.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Times China Holdings going out to 2023, 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.

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