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PAX Global Technology Limited (HKG:327) Full-Year Results: Here's What Analysts Are Forecasting For This Year

Investors in PAX Global Technology Limited (HKG:327) had a good week, as its shares rose 5.3% to close at HK$2.80 following the release of its annual results. The results were positive, with revenue coming in at HK$4.9b, beating analyst expectations by 6.5%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for PAX Global Technology

SEHK:327 Past and Future Earnings April 2nd 2020
SEHK:327 Past and Future Earnings April 2nd 2020

Following last week's earnings report, PAX Global Technology's twin analysts are forecasting 2020 revenues to be HK$4.99b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be HK$0.57, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of HK$5.16b and earnings per share (EPS) of HK$0.63 in 2020. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the HK$4.73 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the PAX Global Technology's past performance and to peers in the same industry. It's pretty clear that there is an expectation that PAX Global Technology's revenue growth will slow down substantially, with revenues next year expected to grow 1.2%, compared to a historical growth rate of 15% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that PAX Global Technology is also expected to grow slower than other industry participants.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on PAX Global Technology. Long-term earnings power is much more important than next year's profits. We have analyst estimates for PAX Global Technology going out as far as 2022, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for PAX Global Technology that you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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