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Meitu Inc’s (HKG:1357): Meitu, Inc., an investment holding company, engages in the provision of Internet services; and design, develops, and sales of smart hardware in the People’s Republic of China, Hong Kong, and internationally. The HK$22.88b market-cap company’s loss lessens since it announced a -CN¥197.3m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -CN¥195.9m, as it approaches breakeven. Many investors are wondering the rate at which 1357 will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for 1357’s growth and when analysts expect the company to become profitable.
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According to the industry analysts covering 1357, breakeven is near. They expect the company to post a final loss in 2018, before turning a profit of CN¥394.5m in 2019. 1357 is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which 1357 must grow year-on-year. It turns out an average annual growth rate of 101% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, 1357 may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of 1357’s upcoming projects, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. 1357 has managed its capital prudently, with debt making up 0.2% of equity. This means that 1357 has predominantly funded its operations from equity capital,and its low debt obligation 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 pertinent factors you should further research:
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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.
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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.
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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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.