Central China Management Company Limited (HKG:9982) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Investors in Central China Management Company Limited (HKG:9982) had a good week, as its shares rose 10.0% to close at HK$1.10 following the release of its yearly results. Central China Management reported in line with analyst predictions, delivering revenues of CN¥1.3b and statutory earnings per share of CN¥0.24, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 Central China Management

Taking into account the latest results, the most recent consensus for Central China Management from twin analysts is for revenues of CN¥1.46b in 2022 which, if met, would be a solid 12% increase on its sales over the past 12 months. Per-share earnings are expected to ascend 15% to CN¥0.27. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.67b and earnings per share (EPS) of CN¥0.30 in 2022. Indeed, we can see that the analysts are a lot more bearish about Central China Management's prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 29% to HK$3.25, with the weaker earnings outlook clearly leading valuation estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Central China Management's past performance and to peers in the same industry. We would highlight that Central China Management's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2022 being well below the historical 18% p.a. growth over the last three years. Compare this to the 275 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 13% per year. Factoring in the forecast slowdown in growth, it looks like Central China Management is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Central China Management. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Central China Management's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Central China Management going out as far as 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Central China Management that you should be aware 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.