LPI Capital Bhd Recorded A 23% Miss On Revenue: Analysts Are Revisiting Their Models

It's been a good week for LPI Capital Bhd (KLSE:LPI) shareholders, because the company has just released its latest full-year results, and the shares gained 5.8% to RM13.84. Revenues fell badly short of expectations, with RM1.2b in sales missing analyst targets by 23%. Statutory earnings per share (EPS) of RM0.85 performed better, coming in 2.0% above analyst models. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for LPI Capital Bhd

Following the latest results, LPI Capital Bhd's five analysts are now forecasting revenues of RM1.63b in 2021. This would be a substantial 33% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 5.7% to RM0.87. In the lead-up to this report, the analysts had been modelling revenues of RM1.67b and earnings per share (EPS) of RM0.87 in 2021. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The consensus has reconfirmed its price target of RM15.04, showing that the analysts don't expect weaker sales expectations next year to have a material impact on LPI Capital Bhd's market value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on LPI Capital Bhd, with the most bullish analyst valuing it at RM19.00 and the most bearish at RM11.70 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. It's clear from the latest estimates that LPI Capital Bhd's rate of growth is expected to accelerate meaningfully, with the forecast 33% revenue growth noticeably faster than its historical growth of 4.0%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 2.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect LPI Capital Bhd to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at RM15.04, 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 LPI Capital Bhd. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for LPI Capital Bhd going out to 2023, and you can see them free on our platform here..

You still need to take note of risks, for example - LPI Capital Bhd has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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