Tan Chong Motor Holdings Berhad (KLSE:TCHONG) Analysts Are More Bearish Than They Used To Be

One thing we could say about the analysts on Tan Chong Motor Holdings Berhad (KLSE:TCHONG) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After this downgrade, Tan Chong Motor Holdings Berhad's five analysts are now forecasting revenues of RM2.2b in 2025. This would be a satisfactory 4.2% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 38% to RM0.20 per share. However, before this estimates update, the consensus had been expecting revenues of RM2.4b and RM0.15 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Tan Chong Motor Holdings Berhad

The consensus price target fell 27% to RM0.33, implicitly signalling that lower earnings per share are a leading indicator for Tan Chong Motor Holdings Berhad's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tan Chong Motor Holdings Berhad's past performance and to peers in the same industry. For example, we noticed that Tan Chong Motor Holdings Berhad's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.2% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 8.9% a year 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 revenue grow 8.6% per year. So although Tan Chong Motor Holdings Berhad's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Tan Chong Motor Holdings Berhad. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Tan Chong Motor Holdings Berhad's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Tan Chong Motor Holdings Berhad's financials, such as the risk of cutting its dividend. Learn more, and discover the 2 other concerns we've identified, for 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 backed by insiders.

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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.