Stock Analysis

Newsflash: Shenzhen Expressway Corporation Limited (HKG:548) Analysts Have Been Trimming Their Revenue Forecasts

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One thing we could say about the analysts on Shenzhen Expressway Corporation Limited (HKG:548) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, Shenzhen Expressway's four analysts are now forecasting revenues of CN¥11b in 2023. This would be a solid 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 41% to CN¥1.30. Prior to this update, the analysts had been forecasting revenues of CN¥12b and earnings per share (EPS) of CN¥1.29 in 2023. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a measurable cut to revenues and reconfirming their earnings per share estimates.

Check out our latest analysis for Shenzhen Expressway

SEHK:548 Earnings and Revenue Growth March 29th 2023

The consensus has reconfirmed its price target of CN¥8.43, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Shenzhen Expressway's market value. 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 Shenzhen Expressway, with the most bullish analyst valuing it at CN¥10.05 and the most bearish at CN¥9.20 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 17% growth on an annualised basis. That is in line with its 18% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.8% per year. So although Shenzhen Expressway is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Shenzhen Expressway after today.

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 Shenzhen Expressway going out to 2025, 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.

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Find out whether Shenzhen Expressway is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.