Central China Management Company Limited (HKG:9982) Analysts Just Slashed This Year's Estimates

Market forces rained on the parade of Central China Management Company Limited (HKG:9982) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. The stock price has risen 6.8% to HK$0.78 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following this downgrade, Central China Management's twin analysts are forecasting 2022 revenues to be CN¥1.0b, approximately in line with the last 12 months. Statutory earnings per share are supposed to decrease 3.4% to CN¥0.18 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥1.2b and earnings per share (EPS) of CN¥0.23 in 2022. Indeed, we can see that the analysts are a lot more bearish about Central China Management's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Central China Management

The consensus price target fell 13% to CN¥2.00, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Central China Management, with the most bullish analyst valuing it at CN¥2.95 and the most bearish at CN¥1.61 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 1.9% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 19% annually over the past year Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 8.5% annually. So while a broad number of companies are forecast to grow, unfortunately Central China Management is expected to see its sales affected worse than other companies in the 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 Central China Management. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Central China Management.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Central China Management going out as far as 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.