Results: Sinic Holdings (Group) Company Limited Exceeded Expectations And The Consensus Has Updated Its Estimates
Sinic Holdings (Group) Company Limited (HKG:2103) investors will be delighted, with the company turning in some strong numbers with its latest results. Statutory revenue and earnings both blasted past expectations, with revenue of CN¥27b beating expectations by 20% and earnings per share (EPS) reaching CN¥0.64, some 56% ahead of expectations. The analyst 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Sinic Holdings (Group) after the latest results.
See our latest analysis for Sinic Holdings (Group)
Taking into account the latest results, the most recent consensus for Sinic Holdings (Group) from lone analyst is for revenues of CN¥35.7b in 2020 which, if met, would be a substantial 32% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 25% to CN¥0.80. Before this earnings report, the analyst had been forecasting revenues of CN¥40.7b and earnings per share (EPS) of CN¥0.77 in 2020. It looks like there's been a meaningful change to the consensus view following the recent earnings report, with the analyst making a real cut to to revenue forecasts and a modest lift to to next year's earnings estimates.
The average price target rose 5.6% to CN¥4.59, with the analyst signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Sinic Holdings (Group)'s revenue growth will slow down substantially, with revenues next year expected to grow 32%, compared to a historical growth rate of 72% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% next year. So it's pretty clear that, while Sinic Holdings (Group)'s revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing here is that the analyst upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Sinic Holdings (Group) following these results. They also downgraded their revenue estimates, although industry data suggests that Sinic Holdings (Group)'s revenues are expected to grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
It is also worth noting that we have found 2 warning signs for Sinic Holdings (Group) (1 can't be ignored!) that you need to take into consideration.
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