Investors in Vinda International Holdings Limited (HKG:3331) had a good week, as its shares rose 3.8% to close at HK$17.64 following the release of its full-year results. Vinda International Holdings reported HK$16b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of HK$0.95 beat expectations, being 2.6% higher than what analysts expected. 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 thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following the latest results, Vinda International Holdings's nine analysts are now forecasting revenues of HK$17.4b in 2020. This would be a meaningful 8.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to surge 23% to HK$1.18. Before this earnings report, analysts had been forecasting revenues of HK$17.6b and earnings per share (EPS) of HK$0.95 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the very substantial lift in earnings per share expectations following these results.
The consensus price target rose 6.6% to HK$20.14, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. There are some variant perceptions on Vinda International Holdings, with the most bullish analyst valuing it at HK$22.00 and the most bearish at HK$15.80 per share. This shows there is still quite a bit of 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.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Vinda International Holdings's revenue growth is expected to slow, with forecast 8.1% increase next year well below the historical 13%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Vinda International Holdings to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Vinda International Holdings's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Vinda International Holdings's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Vinda International Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Vinda International Holdings going out to 2022, and you can see them free on our platform here..
It might also be worth considering whether Vinda International Holdings's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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