As you might know, Shenzhen International Holdings Limited (HKG:152) last week released its latest yearly, and things did not turn out so great for shareholders. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at HK$21b, statutory earnings missed forecasts by an incredible 20%, coming in at just HK$0.79 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. 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 four analysts covering Shenzhen International Holdings provided consensus estimates of HK$15.9b revenue in 2024, which would reflect a painful 22% decline over the past 12 months. Per-share earnings are expected to leap 112% to HK$1.68. In the lead-up to this report, the analysts had been modelling revenues of HK$19.9b and earnings per share (EPS) of HK$1.36 in 2024. There's been a definite change in sentiment after these results, with the analysts delivering a a painful to next year's revenue estimates, while at the same time substantially upgrading EPS. It's almost as though the business is anticipated to reduce its focus on growth to enhance profitability.
The consensus price target fell 19% to HK$9.70, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Shenzhen International Holdings at HK$10.10 per share, while the most bearish prices it at HK$9.00. This is a very narrow spread of estimates, implying either that Shenzhen International Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 22% annualised decline to the end of 2024. That is a notable change from historical growth of 5.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Shenzhen International Holdings is expected to lag 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 Shenzhen International Holdings following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
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 Shenzhen International Holdings analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Shenzhen International Holdings has 2 warning signs (and 1 which shouldn't be ignored) we think 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.