Earnings Beat: KWG Living Group Holdings Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

KWG Living Group Holdings Limited (HKG:3913) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. The results were mixed; although revenues of CN¥1.5b fell 15% short of analyst estimates, statutory earnings per share (EPS) of CN¥0.19 beat expectations by 16%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for KWG Living Group Holdings

After the latest results, the nine analysts covering KWG Living Group Holdings are now predicting revenues of CN¥3.84b in 2021. If met, this would reflect a substantial 153% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to soar 80% to CN¥0.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥3.71b and earnings per share (EPS) of CN¥0.32 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CN¥9.44, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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. The most optimistic KWG Living Group Holdings analyst has a price target of CN¥16.98 per share, while the most pessimistic values it at CN¥7.95. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting KWG Living Group Holdings' growth to accelerate, with the forecast 153% annualised growth to the end of 2021 ranking favourably alongside historical growth of 39% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect KWG Living Group Holdings to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around KWG Living Group Holdings' earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 KWG Living Group Holdings analysts - going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for KWG Living Group Holdings that you need to take into consideration.

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