The analysts covering Sa Sa International Holdings Limited (HKG:178) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following this downgrade, Sa Sa International Holdings' three analysts are forecasting 2025 revenues to be HK$4.4b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be HK$0.07, approximately in line with the last 12 months. Previously, the analysts had been modelling revenues of HK$5.1b and earnings per share (EPS) of HK$0.11 in 2025. Indeed, we can see that the analysts are a lot more bearish about Sa Sa International Holdings' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 20% to HK$1.32, with the weaker earnings outlook clearly leading analyst valuation estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2025. That would be a definite improvement, given that the past five years have seen sales shrink 16% annually. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.1% annually. Although Sa Sa International Holdings' revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sa Sa International Holdings' revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Sa Sa International Holdings.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Sa Sa International Holdings that suggests the company could be somewhat overvalued. Find out why, and see how we estimate the valuation for free on our platform here.

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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.

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