Earnings Update: Weimob Inc. (HKG:2013) Just Reported And Analysts Are Trimming Their Forecasts

Last week, you might have seen that Weimob Inc. (HKG:2013) released its half-yearly result to the market. The early response was not positive, with shares down 10.0% to HK$3.52 in the past week. Revenues came in at CN¥900m, in line with forecasts and the company reported a statutory loss of CN¥0.24 per share, roughly in line with expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Weimob

After the latest results, the consensus from Weimob's 18 analysts is for revenues of CN¥2.07b in 2022, which would reflect a sizeable 21% decline in sales compared to the last year of performance. Losses are expected to increase slightly, to CN¥0.35 per share. Before this earnings announcement, the analysts had been modelling revenues of CN¥2.87b and losses of CN¥0.22 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target fell 16% to HK$6.88, implicitly signalling that lower earnings per share are a leading indicator for Weimob's 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 Weimob at HK$14.20 per share, while the most bearish prices it at HK$3.69. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 38% by the end of 2022. This indicates a significant reduction from annual growth of 27% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 25% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Weimob is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Weimob. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse 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. At Simply Wall St, we have a full range of analyst estimates for Weimob going out to 2024, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Weimob 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.