CIFI Holdings (Group) Co. Ltd. (HKG:884) Analysts Just Slashed This Year's Estimates

The analysts covering CIFI Holdings (Group) Co. Ltd. (HKG:884) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the 23 analysts covering CIFI Holdings (Group), is for revenues of CN¥97b in 2022, which would reflect a noticeable 4.3% reduction in CIFI Holdings (Group)'s sales over the past 12 months. Per-share earnings are expected to leap 27% to CN¥0.64. Prior to this update, the analysts had been forecasting revenues of CN¥108b and earnings per share (EPS) of CN¥0.81 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for CIFI Holdings (Group)

The consensus price target fell 15% to CN¥3.43, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. There are some variant perceptions on CIFI Holdings (Group), with the most bullish analyst valuing it at CN¥7.92 and the most bearish at CN¥2.09 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.3% by the end of 2022. This indicates a significant reduction from annual growth of 27% 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 8.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CIFI Holdings (Group) is expected to lag 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 CIFI Holdings (Group). Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that CIFI Holdings (Group)'s revenues are expected to grow slower 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 CIFI Holdings (Group).

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with CIFI Holdings (Group)'s business, like its declining profit margins. Learn more, and discover the 3 other concerns we've identified, for free on our platform here.

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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.