Stock Analysis

News Flash: Analysts Just Made A Substantial Upgrade To Their Shenzhen Expressway Company Limited (HKG:548) Forecasts

SEHK:548
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Celebrations may be in order for Shenzhen Expressway Company Limited (HKG:548) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. Shenzhen Expressway has also found favour with investors, with the stock up a notable 10% to HK$8.22 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After this upgrade, Shenzhen Expressway's four analysts are now forecasting revenues of CN¥9.5b in 2021. This would be a meaningful 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 12% to CN¥1.06. Previously, the analysts had been modelling revenues of CN¥7.3b and earnings per share (EPS) of CN¥1.09 in 2021. Although sales sentiment looks to be improving, the analysts have made a small dip in per-share earnings estimates, showing a decline in sentiment this week.

View our latest analysis for Shenzhen Expressway

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SEHK:548 Earnings and Revenue Growth March 29th 2021

The consensus price target was unchanged at CN¥8.65, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Shenzhen Expressway analyst has a price target of CN¥11.73 per share, while the most pessimistic values it at CN¥7.17. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Shenzhen Expressway's growth to accelerate, with the forecast 19% annualised growth to the end of 2021 ranking favourably alongside historical growth of 10% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Shenzhen Expressway to grow faster than the wider 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster 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 Expressway.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Shenzhen Expressway, including its declining profit margins. For more information, you can click through to our platform to learn more about this and the 2 other concerns we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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