Need To Know: Analysts Just Made A Substantial Cut To Their China Water Affairs Group Limited (HKG:855) Estimates

Market forces rained on the parade of China Water Affairs Group Limited (HKG:855) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After this downgrade, China Water Affairs Group's dual analysts are now forecasting revenues of HK$13b in 2025. This would be a satisfactory 2.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 3.2% to HK$0.97. Before this latest update, the analysts had been forecasting revenues of HK$16b and earnings per share (EPS) of HK$1.25 in 2025. Indeed, we can see that the analysts are a lot more bearish about China Water Affairs Group's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for China Water Affairs Group

It'll come as no surprise then, to learn that the analysts have cut their price target 5.8% to HK$6.50.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that China Water Affairs Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.8% growth on an annualised basis. This is compared to a historical growth rate of 12% 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 6.7% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than China Water Affairs Group.

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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of China Water Affairs Group.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for China Water Affairs Group going out as far as 2026, and you can see them free on our platform here.

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

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com