Today is shaping up negative for China Yongda Automobiles Services Holdings Limited (HKG:3669) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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. The stock price has risen 8.9% to HK$1.35 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
Following the downgrade, the consensus from 17 analysts covering China Yongda Automobiles Services Holdings is for revenues of CN¥64b in 2024, implying a perceptible 5.3% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to decrease 9.3% to CN¥0.13 in the same period. Previously, the analysts had been modelling revenues of CN¥72b and earnings per share (EPS) of CN¥0.31 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
See our latest analysis for China Yongda Automobiles Services Holdings
The consensus price target fell 17% to CN¥2.15, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic China Yongda Automobiles Services Holdings analyst has a price target of CN¥6.21 per share, while the most pessimistic values it at CN¥0.93. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 10% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 3.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - China Yongda Automobiles Services Holdings is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for China Yongda Automobiles Services Holdings. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of China Yongda Automobiles Services Holdings.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple China Yongda Automobiles Services Holdings analysts - going out to 2026, and you can see them free on our platform here.
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