Hainan Meilan International Airport Company Limited (HKG:357) Analysts Just Slashed This Year's Revenue Estimates By 13%

The latest analyst coverage could presage a bad day for Hainan Meilan International Airport Company Limited (HKG:357), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the most recent consensus for Hainan Meilan International Airport from its six analysts is for revenues of CN¥1.9b in 2022 which, if met, would be a major 21% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to dive 41% to CN¥0.95 in the same period. Previously, the analysts had been modelling revenues of CN¥2.2b and earnings per share (EPS) of CN¥1.18 in 2022. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Hainan Meilan International Airport

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to CN¥27.69. 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 Hainan Meilan International Airport at CN¥46.57 per share, while the most bearish prices it at CN¥24.03. 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 Hainan Meilan International Airport's past performance and to peers in the same industry. The analysts are definitely expecting Hainan Meilan International Airport's growth to accelerate, with the forecast 21% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hainan Meilan International Airport is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Hainan Meilan International Airport's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Hainan Meilan International Airport going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Hainan Meilan International Airport going out to 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.