Hongkong Land Holdings Limited (SGX:H78) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

It's been a good week for Hongkong Land Holdings Limited (SGX:H78) shareholders, because the company has just released its latest interim results, and the shares gained 5.9% to US$5.19. Revenues were US$894m, and Hongkong Land Holdings was a dismal 15% short of estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Hongkong Land Holdings after the latest results.

Check out our latest analysis for Hongkong Land Holdings

Taking into account the latest results, the 13 analysts covering Hongkong Land Holdings provided consensus estimates of US$2.27b revenue in 2022, which would reflect a discernible 5.3% decline on its sales over the past 12 months. Per-share earnings are expected to ascend 10% to US$0.40. In the lead-up to this report, the analysts had been modelling revenues of US$2.41b and earnings per share (EPS) of US$0.43 in 2022. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the US$6.16 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Hongkong Land Holdings analyst has a price target of US$7.80 per share, while the most pessimistic values it at US$4.84. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. We would highlight that sales are expected to reverse, with a forecast 10% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 3.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.4% annually for the foreseeable future. It's pretty clear that Hongkong Land Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$6.16, 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 Hongkong Land Holdings. 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 Hongkong Land Holdings going out to 2024, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Hongkong Land Holdings , and understanding this should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.