GCL Technology Holdings Limited (HKG:3800) Analysts Are Cutting Their Estimates: Here's What You Need To Know

GCL Technology Holdings Limited (HKG:3800) just released its latest annual report and things are not looking great. It definitely looks like a negative result overall with revenues falling 18% short of analyst estimates at CN¥15b. Statutory losses were CN¥0.18 per share, 32% bigger than what the analysts expected. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the consensus forecast from GCL Technology Holdings' eleven analysts is for revenues of CN¥18.6b in 2025. This reflects a major 23% improvement in revenue compared to the last 12 months. Statutory losses are forecast to balloon 84% to CN¥0.027 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥24.4b and earnings per share (EPS) of CN¥0.024 in 2025. There looks to have been a major change in sentiment regarding GCL Technology Holdings' prospects following the latest results, with a large cut to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for GCL Technology Holdings

The consensus price target fell 12% to HK$1.48, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values GCL Technology Holdings at HK$2.00 per share, while the most bearish prices it at HK$1.07. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the GCL Technology Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that GCL Technology Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that GCL Technology Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest low-light for us was that the forecasts for GCL Technology Holdings dropped from profits to a loss next year. They also downgraded GCL Technology Holdings' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 forecasts for GCL Technology Holdings going out to 2027, and you can see them free on our platform here.

It might also be worth considering whether GCL Technology Holdings' debt load is appropriate, using our debt analysis tools on the Simply Wall St 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.