As you might know, Times Neighborhood Holdings Limited (HKG:9928) recently reported its full-year numbers. Times Neighborhood Holdings reported CN¥1.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of CN¥0.25 beat expectations, being 5.7% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Times Neighborhood Holdings’ twelve analysts is for revenues of CN¥2.90b in 2021, which would reflect a substantial 65% increase on its sales over the past 12 months. Statutory earnings per share are predicted to bounce 68% to CN¥0.41. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.99b and earnings per share (EPS) of CN¥0.42 in 2021. 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 average price target was reduced 18% to CN¥9.89, with the lower revenue forecasts indicating negative sentiment towards Times Neighborhood Holdings, even though earnings forecasts were unchanged. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Times Neighborhood Holdings at CN¥15.50 per share, while the most bearish prices it at CN¥7.66. 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.
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 Times Neighborhood Holdings’ rate of growth is expected to accelerate meaningfully, with the forecast 65% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 39% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it’s pretty clear that Times Neighborhood Holdings is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also downgraded their revenue estimates, although industry data suggests that Times Neighborhood Holdings’ revenues are expected to grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Times Neighborhood Holdings going out to 2025, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Times Neighborhood Holdings that you need to take into consideration.
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