Yuexiu Property Company Limited (HKG:123) shareholders are probably feeling a little disappointed, since its shares fell 7.7% to HK$4.31 in the week after its latest full-year results. Revenues were in line with forecasts, at CN¥80b, although statutory earnings per share came in 18% below what the analysts expected, at CN¥0.85 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 most recent consensus for Yuexiu Property from 17 analysts is for revenues of CN¥87.6b in 2024. If met, it would imply a decent 9.1% increase on its revenue over the past 12 months. Per-share earnings are expected to step up 13% to CN¥0.89. In the lead-up to this report, the analysts had been modelling revenues of CN¥88.4b and earnings per share (EPS) of CN¥1.10 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target fell 9.4% to HK$9.47, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Yuexiu Property, with the most bullish analyst valuing it at HK$15.39 and the most bearish at HK$6.49 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Yuexiu Property's revenue growth is expected to slow, with the forecast 9.1% annualised growth rate until the end of 2024 being well below the historical 19% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% annually. So it's pretty clear that, while Yuexiu Property's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value 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 forecasts for Yuexiu Property 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 3 warning signs for Yuexiu Property (of which 1 is potentially serious!) 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.