Shareholders might have noticed that Horizon Construction Development Limited (HKG:9930) filed its annual result this time last week. The early response was not positive, with shares down 3.9% to HK$1.71 in the past week. Results were roughly in line with estimates, with revenues of CN¥9.6b and statutory earnings per share of CN¥0.32. 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.
After the latest results, the five analysts covering Horizon Construction Development are now predicting revenues of CN¥11.1b in 2024. If met, this would reflect a notable 15% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 32% to CN¥0.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥11.6b and earnings per share (EPS) of CN¥0.39 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was reduced 8.4% to HK$4.33, with the lower revenue forecasts indicating negative sentiment towards Horizon Construction Development, even though earnings forecasts were unchanged. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Horizon Construction Development analyst has a price target of HK$5.18 per share, while the most pessimistic values it at HK$2.96. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Horizon Construction Development shareholders.
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. It's pretty clear that there is an expectation that Horizon Construction Development's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 25% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% annually. So it's pretty clear that, while Horizon Construction Development's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Horizon Construction Development's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Horizon Construction Development going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Horizon Construction Development you should know about.
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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.