Yue Yuen Industrial (Holdings) Limited (HKG:551) Just Reported Earnings, And Analysts Cut Their Target Price
Yue Yuen Industrial (Holdings) Limited (HKG:551) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was an okay result overall, with revenues coming in at US$2.0b, roughly what the analysts had been expecting. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Yue Yuen Industrial (Holdings)'s 13 analysts are forecasting 2026 revenues to be US$7.90b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dive 22% to US$0.14 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.02b and earnings per share (EPS) of US$0.19 in 2026. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
Check out our latest analysis for Yue Yuen Industrial (Holdings)
It might be a surprise to learn that the consensus price target fell 6.3% to HK$13.61, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Yue Yuen Industrial (Holdings) analyst has a price target of HK$18.00 per share, while the most pessimistic values it at HK$5.70. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily 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 also point out that the forecast 1.0% annualised revenue decline to the end of 2026 is better than the historical trend, which saw revenues shrink 2.4% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.0% per year. So while a broad number of companies are forecast to grow, unfortunately Yue Yuen Industrial (Holdings) is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Yue Yuen Industrial (Holdings)'s revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Yue Yuen Industrial (Holdings)'s future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Yue Yuen Industrial (Holdings) analysts - going out to 2028, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Yue Yuen Industrial (Holdings) .
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