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Earnings Update: Duiba Group Limited (HKG:1753) Just Reported And Analysts Are Trimming Their Forecasts

As you might know, Duiba Group Limited (HKG:1753) last week released its latest full-year, and things did not turn out so great for shareholders. Earnings fell badly short of analyst estimates, with CN¥1.7b revenue falling -11% short, and statutory losses of CN¥0.22 per share being -15% greater than forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Duiba Group

SEHK:1753 Past and Future Earnings April 2nd 2020
SEHK:1753 Past and Future Earnings April 2nd 2020

After the latest results, the three analysts covering Duiba Group are now predicting revenues of CN¥1.98b in 2020. If met, this would reflect a major 20% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Duiba Group forecast to report a statutory profit of CN¥0.35 per share. In the lead-up to this report, the analysts had been modelling revenues of CN¥2.60b and earnings per share (EPS) of CN¥0.44 in 2020. Indeed, we can see that the analysts are a lot more bearish about Duiba Group's prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

The consensus price target fell 26% to CN¥4.01, with the weaker earnings outlook clearly leading 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. There are some variant perceptions on Duiba Group, with the most bullish analyst valuing it at CN¥4.91 and the most bearish at CN¥3.20 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Duiba Group's revenue growth is expected to slow, with forecast 20% increase next year well below the historical 52%p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% next year. Factoring in the forecast slowdown in growth, it looks like Duiba Group is forecast to grow at about the same rate as 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 Duiba Group. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Duiba Group's future valuation.

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 Duiba Group analysts - going out to 2022, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Duiba Group .

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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