Last week saw the newest annual earnings release from Henderson Land Development Company Limited (HKG:12), an important milestone in the company's journey to build a stronger business. Revenues were in line with forecasts, at HK$28b, although statutory earnings per share came in 17% below what the analysts expected, at HK$1.91 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Henderson Land Development after the latest results.
After the latest results, the eleven analysts covering Henderson Land Development are now predicting revenues of HK$29.3b in 2024. If met, this would reflect a credible 6.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 29% to HK$2.47. In the lead-up to this report, the analysts had been modelling revenues of HK$28.6b and earnings per share (EPS) of HK$2.36 in 2024. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
It will come as no surprise to learn that the analysts have increased their price target for Henderson Land Development 8.9% to HK$24.89on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Henderson Land Development analyst has a price target of HK$34.00 per share, while the most pessimistic values it at HK$16.90. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Henderson Land Development's growth to accelerate, with the forecast 6.4% annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.7% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 6.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Henderson Land Development is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Henderson Land Development following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that Henderson Land Development will grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 estimates - from multiple Henderson Land Development analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Henderson Land Development (1 is a bit concerning) 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.