Sun Hung Kai Properties Limited (HKG:16) missed earnings with its latest half-year results, disappointing overly-optimistic forecasters. Results look to have been somewhat negative - revenue fell 8.2% short of analyst estimates at HK$28b, and statutory earnings of HK$3.16 per share missed forecasts by 5.7%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Sun Hung Kai Properties' 13 analysts is for revenues of HK$75.6b in 2024. This reflects an okay 6.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 4.4% to HK$8.13 in the same period. Before this earnings report, the analysts had been forecasting revenues of HK$79.2b and earnings per share (EPS) of HK$8.55 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
It'll come as no surprise then, to learn that the analysts have cut their price target 5.3% to HK$91.02. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Sun Hung Kai Properties, with the most bullish analyst valuing it at HK$115 and the most bearish at HK$70.50 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. For example, we noticed that Sun Hung Kai Properties' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 12% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 3.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.8% per year. Not only are Sun Hung Kai Properties' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sun Hung Kai Properties. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sun Hung Kai Properties' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Sun Hung Kai Properties. Long-term earnings power is much more important than next year's profits. We have forecasts for Sun Hung Kai Properties going out to 2026, and you can see them free on our platform here.
You can also see whether Sun Hung Kai Properties is carrying too much debt, and whether its balance sheet is healthy, 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.