Here’s what analysts predict for Sunway Construction Group Berhad (KLSE:SUNCON) after earnings miss

The analysts may have been a little too optimistic Sunway Construction Group Berhad (KLSE:SUNCON), as the company fell short of expectations when announcing its quarterly results last week. Earnings fell severely short of analyst estimates, with revenues of RM605 million lagging 18%, and statutory earnings per share (EPS) of RM0.025 some 17% short of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there has been a strong change in the company’s prospects, or if it is business as usual. With this in mind, we’ve collected the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Sunway Construction Group Berhad

Taking into account the latest results, the consensus forecast from Sunway Construction Group Berhad’s 14 analysts is for revenues of RM3.16 billion in 2024. This reflects a decent 15% improvement in revenue compared to the last 12 months. Earnings per share are expected to rise 20% to RM0.14. Leading up to this report, the analysts had been modeling revenues of RM3.17 billion and earnings per share (EPS) of RM0.14 in 2024. So it’s pretty clear that even though the analysts have updated their estimates, there’s no major change in expectations for the company after the latest results.

With the analysts reaffirming their revenue and earnings forecasts, it is surprising to see that the price target rose 9.7% to RM3.30. It seems that previously they had some doubts whether the company would meet their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the average. There are some differing perceptions on Sunway Construction Group Berhad, with the most bullish analyst valuing the stock at RM3.91 and the most bearish at RM2.30 per share. This shows that there is still some diversity in estimates, but analysts don’t seem completely divided on the stock, as if it could be a hit or miss situation.

Another way to look at these predictions is of course to place them in the context of the sector itself. It is clear from the latest estimates that Sunway Construction Group Berhad’s growth rate is expected to accelerate significantly, with the forecast revenue growth of 20% annually through the end of 2024 noticeably faster than the historical growth of 7.4% annually in recent years five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.1% per year. It seems clear that while growth prospects are brighter than in the recent past, analysts also expect Sunway Construction Group Berhad to grow faster than the broader sector.

It comes down to

The most obvious conclusion is that there has been no major change in the company’s prospects in recent times, with the analysts keeping their earnings forecasts steady, in line with previous estimates. Fortunately, there were no major changes to revenue forecasts, with the company still expected to grow faster than the wider industry. We note an upgrade in the price target, which suggests that the analysts believe the company’s intrinsic value is likely to improve over time.

With that in mind, we still believe the company’s long-term trajectory is much more important for investors to consider. We have estimates – from multiple Sunway Construction Group Berhad analysts – going out to 2026, and you can see them for free on our platform here.

That said, it is still necessary to consider the ever-present specter of investment risk. We’ve identified two warning signs with Sunway Construction Group Berhad (at least 1 which is significant), and understanding them should be part of your investment process.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.