Today is shaping up negative for China Aviation Oil (Singapore) Corporation Ltd (SGX:G92) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
Following this downgrade, China Aviation Oil (Singapore)'s single analyst are forecasting 2023 revenues to be US$13b, approximately in line with the last 12 months. Statutory earnings per share are presumed to surge 36% to US$0.053. Prior to this update, the analyst had been forecasting revenues of US$18b and earnings per share (EPS) of US$0.07 in 2023. Indeed, we can see that the analyst is a lot more bearish about China Aviation Oil (Singapore)'s prospects, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for China Aviation Oil (Singapore)
The consensus price target fell 7.3% to US$0.85, with the weaker earnings outlook clearly leading analyst valuation estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would also point out that the forecast 1.6% annualised revenue decline to the end of 2023 is better than the historical trend, which saw revenues shrink 6.3% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to decline 3.5% annually. While China Aviation Oil (Singapore)'s negative revenue trend is expected to moderate, revenues are still expected to shrink next year albeit at a slower rate than the wider industry.
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 China Aviation Oil (Singapore). Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for China Aviation Oil (Singapore) going out as far as 2025, and you can see them 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.