The analysts covering CGN Mining Company Limited (HKG:1164) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the latest downgrade, CGN Mining's eight analysts currently expect revenues in 2025 to be HK$8.6b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 8.0% to HK$0.075. Prior to this update, the analysts had been forecasting revenues of HK$11b and earnings per share (EPS) of HK$0.11 in 2025. Indeed, we can see that the analysts are a lot more bearish about CGN Mining's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for CGN Mining
Analysts made no major changes to their price target of HK$2.08, suggesting the downgrades are not expected to have a long-term impact on CGN Mining's valuation.
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 CGN Mining's revenue growth is expected to slow, with the forecast 0.2% annualised growth rate until the end of 2025 being well below the historical 29% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 0.5% annually. Factoring in the forecast slowdown in growth, it's pretty clear that CGN Mining is still expected to grow faster 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, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on CGN Mining after the downgrade.
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 CGN Mining analysts - going out to 2027, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.
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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.