Earnings Miss: Damai Entertainment Holdings Limited Missed EPS By 22% And Analysts Are Revising Their Forecasts

Damai Entertainment Holdings Limited (HKG:1060) shareholders are probably feeling a little disappointed, since its shares fell 6.5% to HK$0.58 in the week after its latest yearly results. Results overall were not great, with earnings of CN¥0.024 per share falling drastically short of analyst expectations. Meanwhile revenues hit CN¥8.0b and were slightly better than forecasts. 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’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Following the latest results, Damai Entertainment Holdings’ 13 analysts are now forecasting revenues of CN¥9.30b in 2027. This would be a notable 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to climb 14% to CN¥0.027. Before this earnings report, the analysts had been forecasting revenues of CN¥8.81b and earnings per share (EPS) of CN¥0.04 in 2027. So it’s pretty clear the analysts have mixed opinions on Damai Entertainment Holdings after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.

See our latest analysis for Damai Entertainment Holdings

The analysts also cut Damai Entertainment Holdings’ price target 12% to HK$1.06, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Damai Entertainment Holdings, with the most bullish analyst valuing it at HK$1.69 and the most bearish at HK$0.80 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Damai Entertainment Holdings’ past performance and to peers in the same industry. It’s pretty clear that there is an expectation that Damai Entertainment Holdings’ revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.6% annually. Even after the forecast slowdown in growth, it seems obvious that Damai Entertainment Holdings is also expected 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 Damai Entertainment Holdings. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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. At Simply Wall St, we have a full range of analyst estimates for Damai Entertainment Holdings going out to 2029, and you can see them free on our platform here..

You can also see our analysis of Damai Entertainment Holdings’ Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.