The analyst covering Malayan Flour Mills Berhad (KLSE:MFLOUR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After this downgrade, Malayan Flour Mills Berhad's lone analyst is now forecasting revenues of RM3.5b in 2021. This would be a substantial 32% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analyst was forecasting revenues of RM4.0b in 2021. It looks like forecasts have become a fair bit less optimistic on Malayan Flour Mills Berhad, given the measurable cut to revenue estimates.
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 analyst is definitely expecting Malayan Flour Mills Berhad's growth to accelerate, with the forecast 32% annualised growth to the end of 2021 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 4.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Malayan Flour Mills Berhad is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analyst cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Malayan Flour Mills Berhad after today.
That said, the analyst might have good reason to be negative on Malayan Flour Mills Berhad, given its declining profit margins. 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 that insiders are buying.
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