Karex Berhad (KLSE:KAREX) Just Released Its Full-Year Earnings: Here's What Analysts Think

As you might know, Karex Berhad (KLSE:KAREX) last week released its latest annual, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at RM422m, but statutory earnings fell catastrophically short, with a loss of RM0.0059 some 61% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Karex Berhad

After the latest results, the twin analysts covering Karex Berhad are now predicting revenues of RM478.7m in 2023. If met, this would reflect a notable 14% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Karex Berhad forecast to report a statutory profit of RM0.006 per share. Before this earnings report, the analysts had been forecasting revenues of RM501.5m and earnings per share (EPS) of RM0.0087 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the RM0.40 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

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. It's clear from the latest estimates that Karex Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 1.4% p.a. 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 9.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Karex Berhad to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Karex Berhad's revenues are expected to grow faster than the wider industry. The consensus price target held steady at RM0.40, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Karex Berhad. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Karex Berhad that you should be aware of.

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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.