Earnings Update: Comba Telecom Systems Holdings Limited (HKG:2342) Just Reported And Analysts Are Trimming Their Forecasts

Comba Telecom Systems Holdings Limited (HKG:2342) investors will be delighted, with the company turning in some strong numbers with its latest results. Comba Telecom Systems Holdings beat expectations with revenues of HK$5.1b arriving 4.7% ahead of forecasts. The company also reported a statutory loss of HK$0.074, 3.5% smaller than was expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Comba Telecom Systems Holdings

Taking into account the latest results, the consensus forecast from Comba Telecom Systems Holdings' three analysts is for revenues of HK$6.45b in 2021, which would reflect a huge 27% improvement in sales compared to the last 12 months. Comba Telecom Systems Holdings is also expected to turn profitable, with statutory earnings of HK$0.072 per share. Before this earnings report, the analysts had been forecasting revenues of HK$6.83b and earnings per share (EPS) of HK$0.11 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 28% to HK$2.17. 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. There are some variant perceptions on Comba Telecom Systems Holdings, with the most bullish analyst valuing it at HK$2.65 and the most bearish at HK$1.70 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Comba Telecom Systems Holdings shareholders.

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. One thing stands out from these estimates, which is that Comba Telecom Systems Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 27% annualised growth until the end of 2021. If achieved, this would be a much better result than the 4.0% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 12% per year. So it looks like Comba Telecom Systems Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Comba Telecom Systems Holdings. They also downgraded their revenue estimates, although industry data suggests that Comba Telecom Systems Holdings' revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Comba Telecom Systems Holdings' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Comba Telecom Systems Holdings going out to 2023, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Comba Telecom Systems Holdings that we have uncovered.

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This article by Simply Wall St is general in nature. 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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