Last week saw the newest half-year earnings release from Zhuhai Huafa Properties Co.,Ltd (SHSE:600325), an important milestone in the company's journey to build a stronger business. Revenues were CN¥25b, 20% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of CN¥0.79 being in line with what the analysts forecast. 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 Zhuhai Huafa PropertiesLtd after the latest results.
Following the latest results, Zhuhai Huafa PropertiesLtd's seven analysts are now forecasting revenues of CN¥72.2b in 2024. This would be a huge 28% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 84% to CN¥0.65. In the lead-up to this report, the analysts had been modelling revenues of CN¥74.2b and earnings per share (EPS) of CN¥0.68 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The average price target climbed 16% to CN¥8.37despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Zhuhai Huafa PropertiesLtd, with the most bullish analyst valuing it at CN¥8.98 and the most bearish at CN¥7.83 per share. This is a very narrow spread of estimates, implying either that Zhuhai Huafa PropertiesLtd is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Zhuhai Huafa PropertiesLtd's growth to accelerate, with the forecast 64% annualised growth to the end of 2024 ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zhuhai Huafa PropertiesLtd to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded Zhuhai Huafa PropertiesLtd's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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. We have forecasts for Zhuhai Huafa PropertiesLtd going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Zhuhai Huafa PropertiesLtd (at least 2 which are concerning) , and understanding these should be part of your investment process.
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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.
