Thong Guan Industries Berhad Just Missed EPS By 7.7%: Here's What Analysts Think Will Happen Next

Thong Guan Industries Berhad (KLSE:TGUAN) shareholders are probably feeling a little disappointed, since its shares fell 7.5% to RM2.21 in the week after its latest full-year results. It looks like the results were a bit of a negative overall. While revenues of RM961m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 7.7% to hit RM0.19 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Thong Guan Industries Berhad

After the latest results, the twin analysts covering Thong Guan Industries Berhad are now predicting revenues of RM1.07b in 2021. If met, this would reflect a notable 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 9.8% to RM0.22. In the lead-up to this report, the analysts had been modelling revenues of RM1.03b and earnings per share (EPS) of RM0.23 in 2021. So it's pretty clear consensus is mixed on Thong Guan Industries Berhad after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.

The consensus price target fell 6.3% to RM3.22, suggesting that the analysts are primarily focused on earnings as the driver of value for this business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Thong Guan Industries Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 6.4%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 16% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, Thong Guan Industries Berhad is expected to grow slower than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Thong Guan Industries Berhad. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Thong Guan Industries Berhad. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

Before you take the next step you should know about the 3 warning signs for Thong Guan Industries Berhad that we have uncovered.

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