China State Construction Development Holdings Limited (HKG:830) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. China State Construction Development Holdings missed earnings this time around, with HK$8.7b revenue coming in 7.2% below what the analysts had modelled. Statutory earnings per share (EPS) of HK$0.26 also fell short of expectations by 10%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from China State Construction Development Holdings' five analysts is for revenues of HK$10.8b in 2024. This would reflect a substantial 24% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to soar 32% to HK$0.34. Before this earnings report, the analysts had been forecasting revenues of HK$11.2b and earnings per share (EPS) of HK$0.35 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the HK$3.33 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on China State Construction Development Holdings, with the most bullish analyst valuing it at HK$3.65 and the most bearish at HK$3.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting China State Construction Development Holdings' growth to accelerate, with the forecast 24% annualised growth to the end of 2024 ranking favourably alongside historical growth of 17% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect China State Construction Development Holdings 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 China State Construction Development Holdings. They also downgraded China State Construction Development Holdings' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at HK$3.33, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for China State Construction Development Holdings going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for China State Construction Development Holdings you should be aware of.
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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.