What Does The Future Hold For Bonia Corporation Berhad (KLSE:BONIA)? These Analysts Have Been Cutting Their Estimates

The latest analyst coverage could presage a bad day for Bonia Corporation Berhad (KLSE:BONIA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the most recent consensus for Bonia Corporation Berhad from its twin analysts is for revenues of RM294m in 2021 which, if met, would be a modest 7.0% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 242% to RM0.095. Before this latest update, the analysts had been forecasting revenues of RM344m and earnings per share (EPS) of RM0.10 in 2021. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a small dip in EPS estimates to boot.

Check out our latest analysis for Bonia Corporation Berhad

Analysts made no major changes to their price target of RM0.98, suggesting the downgrades are not expected to have a long-term impact on Bonia Corporation Berhad's valuation. 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. The most optimistic Bonia Corporation Berhad analyst has a price target of RM1.00 per share, while the most pessimistic values it at RM0.96. This is a very narrow spread of estimates, implying either that Bonia Corporation Berhad is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that Bonia Corporation Berhad is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.0% annualised growth until the end of 2021. If achieved, this would be a much better result than the 14% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 18% annually for the foreseeable future. Although Bonia Corporation Berhad's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Bonia Corporation Berhad's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Bonia Corporation Berhad after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2023, which can be seen 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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