Analysts' Revenue Estimates For Shenzhen International Holdings Limited (HKG:152) Are Surging Higher

Shenzhen International Holdings Limited (HKG:152) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Shenzhen International Holdings will make substantially more sales than they'd previously expected. The stock price has risen 4.3% to HK$13.00 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the most recent consensus for Shenzhen International Holdings from its six analysts is for revenues of HK$20b in 2021 which, if met, would be a satisfactory 4.2% increase on its sales over the past 12 months. Statutory earnings per share are supposed to dip 6.6% to HK$1.72 in the same period. Prior to this update, the analysts had been forecasting revenues of HK$16b and earnings per share (EPS) of HK$1.72 in 2021. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.

View our latest analysis for Shenzhen International Holdings

It may not be a surprise to see that the analysts have reconfirmed their price target of HK$16.78, implying that the uplift in sales is not expected to greatly contribute to Shenzhen International Holdings's valuation in the near term. 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 Shenzhen International Holdings at HK$18.20 per share, while the most bearish prices it at HK$14.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Shenzhen International Holdings is an easy business to forecast or the underlying assumptions are obvious.

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. It's pretty clear that there is an expectation that Shenzhen International Holdings' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 4.2% growth on an annualised basis. This is compared to a historical growth rate of 21% 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 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Shenzhen International Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Shenzhen International Holdings.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential concerns with Shenzhen International Holdings, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 3 other concerns we've identified .

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