Some Analysts Just Cut Their Hongkong Land Holdings Limited (SGX:H78) Estimates

Today is shaping up negative for Hongkong Land Holdings Limited (SGX:H78) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, Hongkong Land Holdings' ten analysts currently expect revenues in 2023 to be US$2.2b, approximately in line with the last 12 months. Statutory earnings per share are presumed to leap 321% to US$0.38. Before this latest update, the analysts had been forecasting revenues of US$2.5b and earnings per share (EPS) of US$0.41 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

See our latest analysis for Hongkong Land Holdings

Analysts made no major changes to their price target of US$5.28, suggesting the downgrades are not expected to have a long-term impact on Hongkong Land Holdings' valuation. 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. Currently, the most bullish analyst values Hongkong Land Holdings at US$7.30 per share, while the most bearish prices it at US$3.80. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that sales are expected to reverse, with a forecast 0.1% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 1.8% 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 2.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Hongkong Land Holdings is expected to lag the wider 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Hongkong Land Holdings after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Hongkong Land Holdings analysts - going out to 2025, 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. 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.