Shimao Services Holdings Limited (HKG:873) Analysts Just Slashed This Year's Estimates

One thing we could say about the analysts on Shimao Services Holdings Limited (HKG:873) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the 13 analysts covering Shimao Services Holdings are now predicting revenues of CN¥11b in 2022. If met, this would reflect a substantial 32% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 14% to CN¥0.52. Before this latest update, the analysts had been forecasting revenues of CN¥13b and earnings per share (EPS) of CN¥0.63 in 2022. Indeed, we can see that the analysts are a lot more bearish about Shimao Services Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Shimao Services Holdings

The consensus price target fell 14% to CN¥4.79, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. Currently, the most bullish analyst values Shimao Services Holdings at CN¥10.74 per share, while the most bearish prices it at CN¥3.12. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. We would highlight that Shimao Services Holdings' revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2022 being well below the historical 55% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% annually. Even after the forecast slowdown in growth, it seems obvious that Shimao Services Holdings is also expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Shimao Services Holdings. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Shimao Services Holdings.

Still, 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 Shimao Services Holdings going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.