Investors in FIT Hon Teng Limited (HKG:6088) had a good week, as its shares rose 4.2% to close at HK$2.21 following the release of its interim results. It was a credible result overall, with revenues of US$2.1b and statutory earnings per share of US$0.0046 both in line with analyst estimates, showing that FIT Hon Teng is executing in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on FIT Hon Teng after the latest results.

After the latest results, the four analysts covering FIT Hon Teng are now predicting revenues of US$4.68b in 2024. If met, this would reflect a satisfactory 4.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 14% to US$0.027. In the lead-up to this report, the analysts had been modelling revenues of US$4.76b and earnings per share (EPS) of US$0.027 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 9.9% to HK$3.51. It looks as though they previously had some doubts over whether the business would live up to their expectations. 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 FIT Hon Teng at HK$4.26 per share, while the most bearish prices it at HK$3.02. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that FIT Hon Teng's rate of growth is expected to accelerate meaningfully, with the forecast 9.0% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 0.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 12% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, FIT Hon Teng is expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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. At Simply Wall St, we have a full range of analyst estimates for FIT Hon Teng going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for FIT Hon Teng (of which 1 is a bit unpleasant!) you should know about.

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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.