One thing we could say about the analysts on China Renaissance Holdings Limited (HKG:1911) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the current consensus from China Renaissance Holdings' twin analysts is for revenues of CN¥1.6b in 2020 which - if met - would reflect a notable 8.6% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CN¥1.9b of revenue in 2020. It looks like forecasts have become a fair bit less optimistic on China Renaissance Holdings, given the substantial drop in revenue estimates.
There was no particular change to the consensus price target of US$2.08, with China Renaissance Holdings' latest outlook seemingly not enough to result in a change of valuation. 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. There are some variant perceptions on China Renaissance Holdings, with the most bullish analyst valuing it at US$2.45 and the most bearish at US$1.73 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await China Renaissance Holdings shareholders.
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. We would highlight that China Renaissance Holdings' revenue growth is expected to slow, with forecast 8.6% increase next year well below the historical 20% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than China Renaissance Holdings.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for China Renaissance Holdings this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on China Renaissance Holdings after today.
Unanswered questions? We have estimates for China Renaissance Holdings from its twin analysts out until 2022, and you can see them free on our platform here.
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