One thing we could say about the analysts on Zhenro Properties Group Limited (HKG:6158) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 23% to HK$0.80 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following the downgrade, the consensus from three analysts covering Zhenro Properties Group is for revenues of CN¥31b in 2022, implying a definite 17% decline in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 216% to CN¥0.59. Prior to this update, the analysts had been forecasting revenues of CN¥39b and earnings per share (EPS) of CN¥0.59 in 2022. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a sizeable cut to revenues and reconfirming their earnings per share estimates.
The consensus price target rose 5.5% to CN¥0.65, with the analysts apparently satisfied with the business performance despite lower revenue forecasts. 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 Zhenro Properties Group analyst has a price target of CN¥1.00 per share, while the most pessimistic values it at CN¥0.60. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 17% by the end of 2022. This indicates a significant reduction from annual growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. It's pretty clear that Zhenro Properties Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Zhenro Properties Group going forwards.
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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.