Luk Fook Holdings (International) Limited (HKG:590) shareholders are probably feeling a little disappointed, since its shares fell 6.1% to HK$16.24 in the week after its latest annual results. Luk Fook Holdings (International) reported in line with analyst predictions, delivering revenues of HK$15b and statutory earnings per share of HK$3.01, suggesting the business is executing well and in line with its plan. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following last week's earnings report, Luk Fook Holdings (International)'s nine analysts are forecasting 2025 revenues to be HK$15.3b, approximately in line with the last 12 months. Statutory earnings per share are expected to reduce 6.0% to HK$2.83 in the same period. Before this earnings report, the analysts had been forecasting revenues of HK$17.3b and earnings per share (EPS) of HK$3.40 in 2025. Indeed, we can see that the analysts are a lot more bearish about Luk Fook Holdings (International)'s prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 14% to HK$23.49, with the weaker earnings outlook clearly leading valuation estimates. 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. The most optimistic Luk Fook Holdings (International) analyst has a price target of HK$30.00 per share, while the most pessimistic values it at HK$19.55. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Luk Fook Holdings (International) shareholders.

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 revenue is expected to reverse, with a forecast 0.03% annualised decline to the end of 2025. That is a notable change from historical growth of 1.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Luk Fook Holdings (International) is expected to lag the wider industry.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 estimates - from multiple Luk Fook Holdings (International) analysts - going out to 2027, and you can see them free on our platform here.

Even so, be aware that Luk Fook Holdings (International) is showing 1 warning sign in our investment analysis , you should know about...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com