Redsun Properties Group Limited Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Redsun Properties Group Limited (HKG:1996) defied analyst predictions to release its full-year results, which were ahead of market expectations. The company beat expectations with revenues of CN¥15b arriving 2.0% ahead of forecasts. Statutory earnings per share (EPS) were CN¥0.44, 9.0% ahead of estimates. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Redsun Properties Group

Taking into account the latest results, the consensus forecast from Redsun Properties Group's three analysts is for revenues of CN¥22.6b in 2020, which would reflect a major 49% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decrease 5.0% to CN¥0.42 in the same period. Before this earnings report, the analysts had been forecasting revenues of CN¥20.4b and earnings per share (EPS) of CN¥0.59 in 2020. Although revenues are expected to increase meaningfully, the analysts have acknowledged the cost of growth, given the pretty serious reduction to EPS estimates following the latest report.

The consensus price target fell 6.1% to CN¥2.80, suggesting that the analysts are primarily focused on earnings as the driver of value for this business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Redsun Properties Group at CN¥3.02 per share, while the most bearish prices it at CN¥2.64. 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 Redsun Properties Group is an easy business to forecast or that the the analysts are all using similar assumptions.

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 Redsun Properties Group's rate of growth is expected to accelerate meaningfully, with the forecast 49% revenue growth noticeably faster than its historical growth of 24%p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Redsun Properties Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Redsun Properties Group's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Redsun Properties Group going out to 2022, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 5 warning signs for Redsun Properties Group (2 are significant!) that you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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