Hang Lung Properties Limited (HKG:101) shareholders are probably feeling a little disappointed, since its shares fell 2.0% to HK$5.38 in the week after its latest half-yearly results. Results were mixed, with revenues of HK$6.1b exceeding expectations, even as statutory earnings per share (EPS) fell badly short. Earnings were HK$0.23 per share, -51% short of analyst expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Following the latest results, Hang Lung Properties' 13 analysts are now forecasting revenues of HK$11.6b in 2024. This would be a reasonable 3.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 28% to HK$0.71. In the lead-up to this report, the analysts had been modelling revenues of HK$11.6b and earnings per share (EPS) of HK$0.95 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at HK$7.05, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Hang Lung Properties analyst has a price target of HK$10.20 per share, while the most pessimistic values it at HK$5.30. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Hang Lung Properties' rate of growth is expected to accelerate meaningfully, with the forecast 6.9% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hang Lung Properties to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hang Lung Properties. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at HK$7.05, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Hang Lung Properties. Long-term earnings power is much more important than next year's profits. We have forecasts for Hang Lung Properties going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Hang Lung Properties (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

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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.