Sunac Services Holdings Limited (HKG:1516) came out with its half-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the nine analysts covering Sunac Services Holdings are now predicting revenues of CN¥7.30b in 2024. If met, this would reflect a reasonable 2.9% improvement in revenue compared to the last 12 months. Sunac Services Holdings is also expected to turn profitable, with statutory earnings of CN¥0.26 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CN¥7.61b and earnings per share (EPS) of CN¥0.26 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was steady at HK$1.86even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Sunac Services Holdings at HK$2.48 per share, while the most bearish prices it at HK$1.20. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Sunac Services Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.8% annualised growth until the end of 2024. If achieved, this would be a much better result than the 2.3% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.3% annually. So while Sunac Services Holdings' revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall 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. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Still, earnings are more important to the intrinsic value of the business. The consensus price target held steady at HK$1.86, with the latest estimates not enough to have an impact on their price targets.
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 Sunac Services 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 Sunac Services 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.