Kingboard Laminates Holdings Limited (HKG:1888) Analysts Are More Bearish Than They Used To Be

Market forces rained on the parade of Kingboard Laminates Holdings Limited (HKG:1888) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 4.8% to HK$9.91 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the consensus from Kingboard Laminates Holdings' dual analysts is for revenues of HK$27b in 2022, which would reflect a measurable 6.4% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to fall 17% to HK$1.80 in the same period. Prior to this update, the analysts had been forecasting revenues of HK$31b and earnings per share (EPS) of HK$2.01 in 2022. Indeed, we can see that the analysts are a lot more bearish about Kingboard Laminates Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Kingboard Laminates Holdings

It'll come as no surprise then, to learn that the analysts have cut their price target 19% to HK$13.90. 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. Currently, the most bullish analyst values Kingboard Laminates Holdings at HK$16.80 per share, while the most bearish prices it at HK$11.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. We would highlight that sales are expected to reverse, with a forecast 6.4% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 7.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Kingboard Laminates Holdings is expected to lag the wider 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 Kingboard Laminates Holdings. 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 Kingboard Laminates Holdings.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Kingboard Laminates Holdings going out as far as 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.