Fortune Real Estate Investment Trust Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Investors in Fortune Real Estate Investment Trust (HKG:778) had a good week, as its shares rose 4.1% to close at HK$6.91 following the release of its full-year results. It looks like a pretty bad result, all things considered. Although revenues of HK$1.8b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 30% to hit HK$0.25 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Fortune Real Estate Investment Trust

Taking into account the latest results, the most recent consensus for Fortune Real Estate Investment Trust from eight analysts is for revenues of HK$1.82b in 2023 which, if met, would be a reasonable 3.1% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 29% to HK$0.33. Before this earnings report, the analysts had been forecasting revenues of HK$1.82b and earnings per share (EPS) of HK$0.35 in 2023. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at HK$7.27, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Fortune Real Estate Investment Trust analyst has a price target of HK$8.10 per share, while the most pessimistic values it at HK$6.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Fortune Real Estate Investment Trust is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.1% annualised growth until the end of 2023. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.7% annually for the foreseeable future. Although Fortune Real Estate Investment Trust's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at HK$7.27, 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 Fortune Real Estate Investment Trust analysts - going out to 2025, 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 2 warning signs for Fortune Real Estate Investment Trust that you need to be mindful of.

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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.