China South City Holdings Limited's (HKG:1668) Analyst Just Slashed This Year's Estimates

Today is shaping up negative for China South City Holdings Limited (HKG:1668) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for China South City Holdings from its lone analyst is for revenues of HK$8.0b in 2023 which, if met, would be an okay 7.6% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 27% to HK$0.04. Before this latest update, the analyst had been forecasting revenues of HK$10b and earnings per share (EPS) of HK$0.14 in 2023. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for China South City Holdings

It'll come as no surprise then, to learn that the analyst has cut their price target 17% to HK$0.75.

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. One thing stands out from these estimates, which is that China South City Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.6% annualised growth until the end of 2023. If achieved, this would be a much better result than the 0.02% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.0% annually. So it looks like China South City Holdings is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. 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. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of China South City Holdings.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with China South City Holdings, including its declining profit margins. For more information, you can click here to discover this and the 3 other warning signs we've identified.

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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.