As you might know, China Gas Holdings Limited (HKG:384) last week released its latest half-year, and things did not turn out so great for shareholders. China Gas Holdings reported an earnings miss, with HK$28b revenues falling 17% short of analyst models, and earnings per share (EPS) of HK$0.94 also coming in slightly below expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Taking into account the latest results, the current consensus from China Gas Holdings's 18 analysts is for revenues of HK$67.9b in 2020, which would reflect a solid 16% increase on its sales over the past 12 months. Earnings per share are expected to increase 9.3% to HK$1.89. Yet prior to the latest earnings, analysts had been forecasting revenues of HK$71.3b and earnings per share (EPS) of HK$1.86 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The consensus has reconfirmed its price target of HK$35.01, showing that analysts don't expect weaker sales expectations next year to have a material impact on China Gas Holdings's market value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic China Gas Holdings analyst has a price target of HK$43.00 per share, while the most pessimistic values it at HK$20.80. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the China Gas Holdings's past performance and to peers in the same market. Next year brings more of the same, according to analysts, with revenue forecast to grow 16%, in line with its 18% annual growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 12% next year. So it's pretty clear that China Gas Holdings is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at HK$35.01, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for China Gas Holdings going out to 2022, and you can see them free on our platform here..
You can also view our analysis of China Gas Holdings's balance sheet, and whether we think China Gas Holdings is carrying too much debt, for free on our platform here.
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