Brokers Are Upgrading Their Views On China Harmony Auto Holding Limited (HKG:3836) With These New Forecasts

Celebrations may be in order for China Harmony Auto Holding Limited (HKG:3836) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 6.8% over the past week, closing at HK$4.41. Could this big upgrade push the stock even higher?

Following this upgrade, China Harmony Auto Holding's four analysts are forecasting 2021 revenues to be CN¥18b, approximately in line with the last 12 months. Statutory earnings per share are presumed to step up 13% to CN¥0.42. Prior to this update, the analysts had been forecasting revenues of CN¥16b and earnings per share (EPS) of CN¥0.38 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for China Harmony Auto Holding

It will come as no surprise to learn that the analysts have increased their price target for China Harmony Auto Holding 12% to CN¥4.97 on the back of these upgrades. 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. Currently, the most bullish analyst values China Harmony Auto Holding at CN¥7.69 per share, while the most bearish prices it at CN¥4.50. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. It's pretty clear that there is an expectation that China Harmony Auto Holding's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 0.6% growth on an annualised basis. This is compared to a historical growth rate of 9.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 19% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than China Harmony Auto Holding.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at China Harmony Auto Holding.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for China Harmony Auto Holding going out to 2023, 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 upgrading 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.
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