Analyst Estimates: Here's What Brokers Think Of China SCE Group Holdings Limited (HKG:1966) After Its Annual Report

As you might know, China SCE Group Holdings Limited (HKG:1966) just kicked off its latest annual results with some very strong numbers. Results were good overall, with revenues beating analyst predictions by 3.8% to hit CN¥33b. Statutory earnings per share (EPS) came in at CN¥0.89, some 4.7% above whatthe analysts had expected. 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. 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 China SCE Group Holdings

After the latest results, the seven analysts covering China SCE Group Holdings are now predicting revenues of CN¥41.6b in 2021. If met, this would reflect a substantial 28% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 4.7% to CN¥0.95. In the lead-up to this report, the analysts had been modelling revenues of CN¥40.5b and earnings per share (EPS) of CN¥1.03 in 2021. So it's pretty clear consensus is mixed on China SCE Group Holdings after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.

There's been no major changes to the price target of CN¥4.49, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. 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. There are some variant perceptions on China SCE Group Holdings, with the most bullish analyst valuing it at CN¥6.03 and the most bearish at CN¥4.60 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting China SCE Group Holdings' growth to accelerate, with the forecast 28% annualised growth to the end of 2021 ranking favourably alongside historical growth of 21% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that China SCE Group Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at CN¥4.49, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple China SCE Group Holdings analysts - going out to 2023, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with China SCE Group Holdings (at least 1 which is concerning) , and understanding these should be part of your investment process.

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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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