Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (HKG:520) just released its latest half-year report and things are not looking great. Unfortunately, Xiabuxiabu Catering Management (China) Holdings delivered a serious earnings miss. Revenues of CN¥2.4b were 17% below expectations, and statutory losses ballooned 774% to CN¥0.26 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Xiabuxiabu Catering Management (China) Holdings after the latest results.
Taking into account the latest results, the eight analysts covering Xiabuxiabu Catering Management (China) Holdings provided consensus estimates of CN¥5.21b revenue in 2024, which would reflect a measurable 3.8% decline over the past 12 months. Statutory losses are forecast to balloon 31% to CN¥0.30 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥6.34b and earnings per share (EPS) of CN¥0.11 in 2024. There looks to have been a major change in sentiment regarding Xiabuxiabu Catering Management (China) Holdings' prospects following the latest results, with a real cut to revenues and the analysts now forecasting a loss instead of a profit.
The consensus price target fell 6.6% to HK$1.91, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Xiabuxiabu Catering Management (China) Holdings analyst has a price target of HK$4.25 per share, while the most pessimistic values it at HK$0.96. 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. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xiabuxiabu Catering Management (China) Holdings' past performance and to peers in the same industry. Over the past five years, revenues have declined around 0.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 7.5% decline in revenue until the end of 2024. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 12% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Xiabuxiabu Catering Management (China) Holdings to suffer worse than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Xiabuxiabu Catering Management (China) Holdings dropped from profits to a loss next year. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Xiabuxiabu Catering Management (China) Holdings analysts - going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Xiabuxiabu Catering Management (China) Holdings 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.
