Celebrations may be in order for Hong Kong Television Network Limited (HKG:1137) shareholders, with the covering analyst delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analyst modelling a real improvement in business performance. The market seems to be pricing in some improvement in the business too, with the stock up 8.0% over the past week, closing at HK$4.84. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
Following the upgrade, the current consensus from Hong Kong Television Network's solo analyst is for revenues of HK$2.6b in 2020 which - if met - would reflect a sizeable 81% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 75% to HK$0.09. Yet prior to the latest estimates, the analyst had been forecasting revenues of HK$1.7b and losses of HK$0.33 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analyst administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
It will come as no surprise to learn that the analyst has increased their price target for Hong Kong Television Network 57% to HK$6.60 on the back of these upgrades.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Hong Kong Television Network's rate of growth is expected to accelerate meaningfully, with the forecast 81% revenue growth noticeably faster than its historical growth of 54% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Hong Kong Television Network to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Hong Kong Television Network is moving incrementally towards profitability. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Hong Kong Television Network could be worth investigating further.
That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Hong Kong Television Network to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.
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