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China Cinda Asset Management Co., Ltd.
(
HKG:1359
) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the current consensus from China Cinda Asset Management's five analysts is for revenues of CN¥99b in 2020 which - if met - would reflect a huge 91% increase on its sales over the past 12 months. Per-share earnings are expected to jump 28% to CN¥0.35. Prior to this update, the analysts had been forecasting revenues of CN¥118b and earnings per share (EPS) of CN¥0.39 in 2020. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.
View our latest analysis for China Cinda Asset Management
SEHK:1359 Past and Future Earnings April 3rd 2020
It'll come as no surprise then, to learn that the analysts have cut their price target 6.0% to CN¥1.83. 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 Cinda Asset Management analyst has a price target of CN¥2.11 per share, while the most pessimistic values it at CN¥1.61. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that China Cinda Asset Management is an easy business to forecast or that the underlying assumptions are knowable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that China Cinda Asset Management's rate of growth is expected to accelerate meaningfully, with the forecast 91% revenue growth noticeably faster than its historical growth of 3.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that China Cinda Asset Management is expected to grow much faster than its industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for China Cinda Asset Management. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Story continues
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple China Cinda Asset Management analysts - going out to 2022, and you can
see them free on our platform here.
Of course, seeing company management
invest large sums of money
in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this
free
list of stocks that insiders are buying
.
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. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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