One thing we could say about the analysts on Yuzhou Properties Company Limited (HKG:1628) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At CN¥3.23, shares are up 5.9% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the 13 analysts covering Yuzhou Properties are now predicting revenues of CN¥34b in 2020. If met, this would reflect a substantial 46% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 32% to CN¥0.94. Before this latest update, the analysts had been forecasting revenues of CN¥38b and earnings per share (EPS) of CN¥0.98 in 2020. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

Check out our latest analysis for Yuzhou Properties

Despite the cuts to forecast earnings, there was no real change to the CN¥4.56 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Yuzhou Properties at CN¥6.94 per share, while the most bearish prices it at CN¥3.72. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for 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. It's clear from the latest estimates that Yuzhou Properties' rate of growth is expected to accelerate meaningfully, with the forecast 46% revenue growth noticeably faster than its historical growth of 25% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Yuzhou Properties is expected to grow much faster than its 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 Yuzhou Properties. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Yuzhou Properties going forwards.