Kimly Limited Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Kimly Limited (Catalist:1D0) had a good week, as its shares rose 2.9% to close at S$0.36 following the release of its annual results. Kimly beat revenue forecasts by a solid 12% to hit S$318m. Statutory earnings per share fell 16% short of expectations, at S$0.027. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Kimly

Taking into account the latest results, the current consensus, from the three analysts covering Kimly, is for revenues of S$300.1m in 2023, which would reflect a discernible 5.6% reduction in Kimly's sales over the past 12 months. Statutory earnings per share are expected to decline 12% to S$0.024 in the same period. In the lead-up to this report, the analysts had been modelling revenues of S$304.0m and earnings per share (EPS) of S$0.031 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at S$0.41, 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. There are some variant perceptions on Kimly, with the most bullish analyst valuing it at S$0.46 and the most bearish at S$0.37 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.6% by the end of 2023. This indicates a significant reduction from annual growth of 8.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 13% per year. It's pretty clear that Kimly's revenues are expected to perform substantially worse 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 Kimly. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Kimly's revenues are expected to perform worse than the wider industry. The consensus price target held steady at S$0.41, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Kimly analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Kimly is showing 2 warning signs in our investment analysis , you should know about...

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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.

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