Today is shaping up negative for Shimao Services Holdings Limited (HKG:873) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, Shimao Services Holdings' six analysts currently expect revenues in 2024 to be CN¥8.2b, approximately in line with the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CN¥9.4b in 2024. It looks like forecasts have become a fair bit less optimistic on Shimao Services Holdings, given the substantial drop in revenue estimates.
The consensus price target fell 9.7% to CN¥0.92, with the analysts clearly less optimistic about Shimao Services Holdings' valuation following this update. 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 Shimao Services Holdings at CN¥1.10 per share, while the most bearish prices it at CN¥0.75. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Shimao Services Holdings' revenue growth is expected to slow, with the forecast 0.3% annualised growth rate until the end of 2024 being well below the historical 26% 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 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Shimao Services Holdings.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Shimao Services Holdings' future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Shimao Services Holdings going forwards.
Still got questions? We have estimates for Shimao Services Holdings from its six analysts out until 2026, and you can see them free on our platform here.
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