Last week, you might have seen that Hongkong Land Holdings Limited (SGX:H78) released its half-year result to the market. The early response was not positive, with shares down 4.5% to US$3.21 in the past week. Revenue greatly exceeded expectations at US$972m, some 53% ahead of analyst forecasts. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the current consensus, from the twelve analysts covering Hongkong Land Holdings, is for revenues of US$1.95b in 2024. This implies a chunky 9.3% reduction in Hongkong Land Holdings' revenue over the past 12 months. Earnings are expected to improve, with Hongkong Land Holdings forecast to report a statutory profit of US$0.17 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.94b and earnings per share (EPS) of US$0.27 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target fell 5.4% to US$3.40, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Hongkong Land Holdings, with the most bullish analyst valuing it at US$3.90 and the most bearish at US$2.64 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. One more thing stood out to us about these estimates, and it's the idea that Hongkong Land Holdings' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 18% to the end of 2024. This tops off a historical decline of 1.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 0.6% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Hongkong Land Holdings to suffer worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hongkong Land Holdings. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hongkong Land Holdings' revenue is expected to 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 in mind, we wouldn't be too quick to come to a conclusion on Hongkong Land Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Hongkong Land Holdings going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Hongkong Land Holdings that you should be aware of.

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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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