Investors in Shenzhen Overseas Chinese Town Co.,Ltd. (SZSE:000069) had a good week, as its shares rose 5.2% to close at CN¥2.64 following the release of its first-quarter results. Revenues of CN¥8.7b beat estimates by a substantial 51% margin, but unfortunately Shenzhen Overseas Chinese TownLtd fell substantially short of earnings forecasts, reporting a statutory loss of CN¥0.044 per share, where the analysts had previously predicted a profit. 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 Shenzhen Overseas Chinese TownLtd's five analysts is for revenues of CN¥66.7b in 2024. This would reflect a decent 16% increase on its revenue over the past 12 months. Shenzhen Overseas Chinese TownLtd is also expected to turn profitable, with statutory earnings of CN¥0.025 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥53.8b and earnings per share (EPS) of CN¥0.22 in 2024. Although revenue sentiment has improved substantially, the analysts have made a pretty serious reduction to per-share earnings estimates, suggesting that the growth is not without cost.
There's been no major changes to the price target of CN¥3.17, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Shenzhen Overseas Chinese TownLtd analyst has a price target of CN¥4.80 per share, while the most pessimistic values it at CN¥2.10. 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. It's clear from the latest estimates that Shenzhen Overseas Chinese TownLtd's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 6.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Shenzhen Overseas Chinese TownLtd is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shenzhen Overseas Chinese TownLtd. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Shenzhen Overseas Chinese TownLtd analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Shenzhen Overseas Chinese TownLtd .
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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.