Sun Hung Kai Properties Limited Just Missed Earnings - But Analysts Have Updated Their Models

As you might know, Sun Hung Kai Properties Limited (HKG:16) last week released its latest yearly, and things did not turn out so great for shareholders. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of HK$83b missed by 16%, and statutory earnings per share of HK$8.12 fell short of forecasts by 27%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Sun Hung Kai Properties

After the latest results, the 13 analysts covering Sun Hung Kai Properties are now predicting revenues of HK$91.0b in 2021. If met, this would reflect a meaningful 10% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 34% to HK$10.86. In the lead-up to this report, the analysts had been modelling revenues of HK$92.5b and earnings per share (EPS) of HK$10.86 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of HK$130, showing that the business is executing well and in line with expectations. 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. There are some variant perceptions on Sun Hung Kai Properties, with the most bullish analyst valuing it at HK$157 and the most bearish at HK$120 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sun Hung Kai Properties' past performance and to peers in the same industry. It's clear from the latest estimates that Sun Hung Kai Properties' rate of growth is expected to accelerate meaningfully, with the forecast 10% revenue growth noticeably faster than its historical growth of 1.2%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Sun Hung Kai Properties is expected to grow slower 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Sun Hung Kai Properties' revenues are expected to perform worse than the wider industry. The consensus price target held steady at HK$130, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sun Hung Kai Properties analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Sun Hung Kai Properties that we have uncovered.

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This article by Simply Wall St is general in nature. 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.
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