Analysts Have Lowered Expectations For Zhongsheng Group Holdings Limited (HKG:881) After Its Latest Results

Last week, you might have seen that Zhongsheng Group Holdings Limited (HKG:881) released its full-year result to the market. The early response was not positive, with shares down 4.1% to HK$13.68 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at CN¥168b, statutory earnings beat expectations 4.1%, with Zhongsheng Group Holdings reporting profits of CN¥1.35 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Zhongsheng Group Holdings after the latest results.

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Taking into account the latest results, Zhongsheng Group Holdings' 15 analysts currently expect revenues in 2025 to be CN¥171.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 25% to CN¥1.69. In the lead-up to this report, the analysts had been modelling revenues of CN¥184.9b and earnings per share (EPS) of CN¥1.87 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

View our latest analysis for Zhongsheng Group Holdings

The analysts made no major changes to their price target of HK$17.90, suggesting the downgrades are not expected to have a long-term impact on Zhongsheng Group Holdings' valuation. 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 Zhongsheng Group Holdings at HK$29.85 per share, while the most bearish prices it at HK$10.41. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Zhongsheng Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.9% growth on an annualised basis. This is compared to a historical growth rate of 6.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% annually. Factoring in the forecast slowdown in growth, it seems obvious that Zhongsheng Group Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Zhongsheng Group Holdings. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at HK$17.90, with the latest estimates not enough to have an impact on their price targets.

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. At Simply Wall St, we have a full range of analyst estimates for Zhongsheng Group Holdings going out to 2027, and you can see them free on our platform here..

You still need to take note of risks, for example - Zhongsheng Group Holdings has 2 warning signs we think 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.