Industry Analysts Just Upgraded Their Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6) Revenue Forecasts By 14%

Celebrations may be in order for Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Yangzijiang Shipbuilding (Holdings) will make substantially more sales than they'd previously expected. The market seems to be pricing in some improvement in the business too, with the stock up 9.5% over the past week, closing at S$1.50. Could this big upgrade push the stock even higher?

After the upgrade, the nine analysts covering Yangzijiang Shipbuilding (Holdings) are now predicting revenues of CN¥21b in 2021. If met, this would reflect a substantial 52% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be CN¥0.75, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of CN¥19b and earnings per share (EPS) of CN¥0.75 in 2021. There's clearly been a surge in bullishness around the company's sales pipeline, even if there's no real change in earnings per share forecasts.

View our latest analysis for Yangzijiang Shipbuilding (Holdings)

Analysts increased their price target 6.0% to CN¥7.88, perhaps signalling that higher revenues are a strong leading indicator for Yangzijiang Shipbuilding (Holdings)'s valuation. 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 Yangzijiang Shipbuilding (Holdings), with the most bullish analyst valuing it at CN¥2.05 and the most bearish at CN¥0.96 per share. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

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. The analysts are definitely expecting Yangzijiang Shipbuilding (Holdings)'s growth to accelerate, with the forecast 131% annualised growth to the end of 2021 ranking favourably alongside historical growth of 4.1% per annum 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 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Yangzijiang Shipbuilding (Holdings) is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Yangzijiang Shipbuilding (Holdings).

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Yangzijiang Shipbuilding (Holdings) analysts - going out to 2023, and you can see them 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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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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