Market forces rained on the parade of Sa Sa International Holdings Limited (HKG:178) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Surprisingly the share price has been buoyant, rising 13% to HK$0.81 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following the latest downgrade, Sa Sa International Holdings' three analysts currently expect revenues in 2025 to be HK$4.4b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be HK$0.07, approximately in line with the last 12 months. Before this latest update, the analysts had been forecasting revenues of HK$5.1b and earnings per share (EPS) of HK$0.11 in 2025. Indeed, we can see that the analysts are a lot more bearish about Sa Sa International Holdings' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Sa Sa International Holdings
The consensus price target fell 20% to HK$1.32, with the weaker earnings outlook clearly leading analyst valuation estimates.
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 also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2025. Historically, Sa Sa International Holdings' sales have shrunk approximately 16% annually over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.2% annually. Although Sa Sa International Holdings' revenues are expected to improve, it seems that it is still expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sa Sa International Holdings' revenues are expected to grow slower 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.
Uncomfortably, our automated valuation tool also suggests that Sa Sa International Holdings stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. You can learn more about our valuation methodology for free on our platform here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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