An analyst from Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163) has just cut its EPS forecast

The latest analyst coverage could portend a bad day for Changsha Broad Homes Industrial Group Co., Ltd. (HKG:2163), with the hedge analyst making sweeping cuts to its statutory estimates, which may leave shareholders a bit shocked. Earnings and earnings per share (EPS) estimates were sharply reduced as the analyst took into account the company’s latest outlook, concluding that it was previously too optimistic. However, investors have been significantly more bullish about industry group Changsha Broad Homes recently, with the share price rising 13% to HK$9.90 last week. Whether the downgrade will have a negative impact on equity demand remains to be seen.

Following the latest downgrade, Changsha Broad Homes Industrial Group’s only analyst currently expects revenue in 2022 to be 3.1 trillion Canadian yen, roughly matching those of last 12 months. Statutory earnings per share are presumed to jump 155% to C¥0.17. Prior to this update, the analyst forecast revenue of 3.7 billion Canadian yen and earnings per share (EPS) of 0.46 billion domestic yen in 2022. Indeed, we can see that the analyst is much more bearish on the outlook for Changsha Broad Homes Industrial Group. , administering a measurable reduction in revenue estimates and lowering their EPS estimates to boot.

See our latest analysis for Changsha Broad Homes Industrial Group

SEHK: 2163 Profit and Revenue Growth April 4, 2022

The consensus price target fell 5.4% to CN¥6.49, with the weaker earnings outlook clearly leading analysts’ valuation estimates.

Of course, another way to look at these predictions is to put them in context with the industry itself. We emphasize that Changsha Broad Homes Industrial Group’s revenue growth is expected to slow, with the projected annualized growth rate of 1.0% through the end of 2022 being well below the historic growth of 9.5% per year during of the last five years. By comparison, the other companies in this sector covered by analysts are expected to increase their turnover by 13% per year. Given the expected slowdown in growth, it seems obvious that the Changsha Broad Homes industry group is also expected to grow more slowly than other players in the sector.

The essential

The biggest issue in the new estimates is that the analyst cut earnings per share estimates, suggesting headwinds are ahead for Changsha Broad Homes Industrial Group. Unfortunately, they’ve also lowered their revenue estimates, and the latest forecasts imply that the company will grow sales more slowly than the broader market. After such a drastic shift in sentiment from the analyst, we would understand if readers were now a bit wary of the Changsha Broad Homes industry group.

That said, the coverage analyst might have good reason to be negative on Changsha Broad Homes Industrial Group, given its declining profit margins. For more information, you can click here to discover this flag and the 2 other flags that we have identified.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.