Need To Know: This Analyst Just Made A Substantial Cut To Their Chong Hong Construction Co., Ltd. (TWSE:5534) Estimates

The analyst covering Chong Hong Construction Co., Ltd. (TWSE:5534) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the latest consensus from Chong Hong Construction's sole analyst is for revenues of NT$15b in 2024, which would reflect a substantial 57% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 65% to NT$10.10. Before this latest update, the analyst had been forecasting revenues of NT$17b and earnings per share (EPS) of NT$11.44 in 2024. Indeed, we can see that the analyst is a lot more bearish about Chong Hong Construction's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Chong Hong Construction

The consensus price target fell 26% to NT$125, with the weaker earnings outlook clearly leading analyst valuation estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Chong Hong Construction is forecast to grow faster in the future than it has in the past, with revenues expected to display 82% annualised growth until the end of 2024. If achieved, this would be a much better result than the 1.9% 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 8.0% annually. So it looks like Chong Hong Construction is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Chong Hong Construction. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Chong Hong Construction.

As you can see, this analyst clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with Chong Hong Construction's financials, such as its declining profit margins. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.

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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.

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