Tongda Group Holdings Limited (HKG:698) came out with its interim results last week, and we wanted to see how the business is performing and what industry forecasts think of the company following this report. It was a pretty good result, with revenues of HK$3.0b, and Tongda Group Holdings came in a solid 17% ahead of expectations. Following the result, the analyst has 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. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Following the recent earnings report, the consensus from one analyst covering Tongda Group Holdings is for revenues of HK$5.75b in 2024. This implies a not inconsiderable 12% decline in revenue compared to the last 12 months. Tongda Group Holdings is also expected to turn profitable, with statutory earnings of HK$0.003 per share. Before this earnings report, the analyst had been forecasting revenues of HK$5.60b and earnings per share (EPS) of HK$0.016 in 2024. So it's pretty clear the analyst has mixed opinions on Tongda Group Holdings after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.

The analyst also cut Tongda Group Holdings' price target 7.7% to HK$0.12, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue.

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. Over the past five years, revenues have declined around 8.1% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 22% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 13% per year. So it's pretty clear that, while it does have declining revenues, the analyst also expect Tongda Group Holdings to suffer worse than the wider industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tongda Group Holdings. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. Furthermore, the analyst 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 analyst estimates for Tongda Group Holdings going out as far as 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Tongda Group Holdings has 1 warning sign we think 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.