Time To Worry? Analysts Are Downgrading Their Chow Sang Sang Holdings International Limited (HKG:116) Outlook

Simply Wall St

The latest analyst coverage could presage a bad day for Chow Sang Sang Holdings International Limited (HKG:116), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the seven analysts covering Chow Sang Sang Holdings International provided consensus estimates of HK$15b revenue in 2020, which would reflect an uneasy 18% decline on its sales over the past 12 months. Per-share earnings are expected to leap 34% to HK$1.28. Previously, the analysts had been modelling revenues of HK$18b and earnings per share (EPS) of HK$1.55 in 2020. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

See our latest analysis for Chow Sang Sang Holdings International

SEHK:116 Past and Future Earnings March 31st 2020

It'll come as no surprise then, to learn that the analysts have cut their price target 15% to HK$10.36. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Chow Sang Sang Holdings International analyst has a price target of HK$13.50 per share, while the most pessimistic values it at HK$7.90. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chow Sang Sang Holdings International's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Chow Sang Sang Holdings International'sdecline is expected to accelerate, with revenues forecast to fall 18% next year, topping off a historical decline of 0.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 11% per year. So while a broad number of companies are forecast to decline, unfortunately Chow Sang Sang Holdings International is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Chow Sang Sang Holdings International's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Chow Sang Sang Holdings International.

Still, 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 Chow Sang Sang Holdings International going out to 2022, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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