Analysts Just Made A Neat Upgrade To Their Greentown China Holdings Limited (HKG:3900) Forecasts

Greentown China Holdings Limited (HKG:3900) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. Investors have been pretty optimistic on Greentown China Holdings too, with the stock up 20% to HK$13.78 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, Greentown China Holdings' seven analysts are now forecasting revenues of CN¥117b in 2022. This would be a meaningful 16% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 20% to CN¥1.57. Before this latest update, the analysts had been forecasting revenues of CN¥106b and earnings per share (EPS) of CN¥1.41 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

See our latest analysis for Greentown China Holdings

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥11.19, suggesting that the forecast performance does not have a long term impact on the company's 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. Currently, the most bullish analyst values Greentown China Holdings at CN¥15.91 per share, while the most bearish prices it at CN¥10.74. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 16% growth on an annualised basis. That is in line with its 19% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So although Greentown 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 most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Greentown China Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Greentown China Holdings analysts - going out to 2024, 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.