Malakoff Corporation Berhad Recorded A 17% Miss On Revenue: Analysts Are Revisiting Their Models

It's shaping up to be a tough period for Malakoff Corporation Berhad (KLSE:MALAKOF), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It looks like a clear earnings miss, with both revenues and earnings falling well short of analyst predictions. Revenues of RM6.3b missed by 17%, and statutory earnings per share of RM0.059 fell short of forecasts by 12%. 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 Malakoff Corporation Berhad

After the latest results, the nine analysts covering Malakoff Corporation Berhad are now predicting revenues of RM7.32b in 2021. If met, this would reflect a meaningful 17% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to expand 14% to RM0.067. Yet prior to the latest earnings, the analysts had been anticipated revenues of RM7.59b and earnings per share (EPS) of RM0.07 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the RM1.01 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Malakoff Corporation Berhad, with the most bullish analyst valuing it at RM1.15 and the most bearish at RM0.85 per share. This is a very narrow spread of estimates, implying either that Malakoff Corporation Berhad is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Malakoff Corporation Berhad's past performance and to peers in the same industry. It's clear from the latest estimates that Malakoff Corporation Berhad's rate of growth is expected to accelerate meaningfully, with the forecast 17% revenue growth noticeably faster than its historical growth of 4.4%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.7% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Malakoff Corporation Berhad to grow faster 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 Malakoff Corporation Berhad. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Malakoff Corporation Berhad going out to 2023, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Malakoff Corporation Berhad .

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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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