Earnings Release: Here's Why Analysts Cut Their Poly Property Services Co., Ltd. (HKG:6049) Price Target To CN¥52.31

Shareholders might have noticed that Poly Property Services Co., Ltd. (HKG:6049) filed its yearly result this time last week. The early response was not positive, with shares down 6.1% to HK$50.70 in the past week. Revenues of CN¥8.0b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at CN¥1.22, missing estimates by 2.8%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Poly Property Services

Following the latest results, Poly Property Services' 14 analysts are now forecasting revenues of CN¥10.6b in 2021. This would be a substantial 32% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 27% to CN¥1.54. Before this earnings report, the analysts had been forecasting revenues of CN¥10.6b and earnings per share (EPS) of CN¥1.65 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target fell 16% to CN¥52.31, with the analysts clearly linking lower forecast earnings to the performance of the stock price. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Poly Property Services analyst has a price target of CN¥92.30 per share, while the most pessimistic values it at CN¥52.46. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Poly Property Services' past performance and to peers in the same industry. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 32% growth on an annualised basis. That is in line with its 28% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. So although Poly Property Services is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Poly Property Services. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Poly Property Services' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Poly Property Services going out to 2023, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for Poly Property Services that you need to be mindful of.

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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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