Meitu Inc’s (SEHK:1357): Meitu, Inc., an investment holding company, engages in the provision of Internet services; and developing, manufacturing, and sales of smart hardware and others in the People’s Republic of China, Hong Kong, and internationally. With the latest financial year loss of -CN¥6.26B and a trailing-twelve month of -CN¥4.20B, the HK$41.98B market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which 1357 will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for 1357.

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According to the industry analysts covering 1357, breakeven is near. They anticipate the company to incur a final loss in 2017, before generating positive profits of CN¥1.01B in 2018. Therefore, 1357 is expected to breakeven roughly a few months from now. How fast will 1357 have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 97.74% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, 1357 may become profitable much later than analysts predict.

Underlying developments driving 1357’s growth isn’t the focus of this broad overview, however, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that 1357 has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that 1357 has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of 1357 which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at 1357, take a look at 1357’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should look at:

1. Valuation: What is 1357 worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether 1357 is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Meitu’s board and the CEO’s back ground.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.