Prosperity Real Estate Investment Trust Just Missed Earnings With A Surprise Loss - Here Are Analysts Latest Forecasts

Last week saw the newest full-year earnings release from Prosperity Real Estate Investment Trust (HKG:808), an important milestone in the company's journey to build a stronger business. Things were not great overall, with a surprise (statutory) loss of HK$0.58 per share on revenues of HK$453m, even though the analysts had been expecting a profit. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Prosperity Real Estate Investment Trust

Taking into account the latest results, Prosperity Real Estate Investment Trust's two analysts currently expect revenues in 2021 to be HK$444.0m, approximately in line with the last 12 months. Prosperity Real Estate Investment Trust is also expected to turn profitable, with statutory earnings of HK$0.13 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$461.0m and earnings per share (EPS) of HK$0.14 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the HK$3.10 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 2.0% by the end of 2021. This indicates a significant reduction from annual growth of 0.7% 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 4.5% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Prosperity Real Estate Investment Trust is expected to lag the wider 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 in mind, we wouldn't be too quick to come to a conclusion on Prosperity Real Estate Investment Trust. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Prosperity Real Estate Investment Trust going out as far as 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Prosperity Real Estate Investment Trust you should know about.

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