Kuala Lumpur Kepong Berhad Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected
The quarterly results for Kuala Lumpur Kepong Berhad (KLSE:KLK) were released last week, making it a good time to revisit its performance. Revenues were RM5.6b, 14% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of RM0.77 being in line with what the analysts forecast. 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. 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 Kuala Lumpur Kepong Berhad
Taking into account the latest results, the consensus forecast from Kuala Lumpur Kepong Berhad's 18 analysts is for revenues of RM24.8b in 2024. This reflects a decent 9.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 114% to RM1.23. Before this earnings report, the analysts had been forecasting revenues of RM24.9b and earnings per share (EPS) of RM1.34 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at RM23.38, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Kuala Lumpur Kepong Berhad analyst has a price target of RM25.80 per share, while the most pessimistic values it at RM19.70. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 13% growth on an annualised basis. That is in line with its 12% annual growth 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 revenues grow 3.7% per year. So although Kuala Lumpur Kepong Berhad is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 Kuala Lumpur Kepong Berhad going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 3 warning signs for Kuala Lumpur Kepong Berhad you should be aware of, and 1 of them doesn't sit too well with us.
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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.