Analysts Are Optimistic We'll See A Profit From Hunan New Wellful Co.,Ltd. (SHSE:600975)

We feel now is a pretty good time to analyse Hunan New Wellful Co.,Ltd.'s (SHSE:600975) business as it appears the company may be on the cusp of a considerable accomplishment. Hunan New Wellful Co.,Ltd. primarily engages in the breeding and supplying of pigs. The CN¥8.1b market-cap company’s loss lessened since it announced a CN¥1.2b loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥453m, as it approaches breakeven. Many investors are wondering about the rate at which Hunan New WellfulLtd will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Hunan New WellfulLtd

Consensus from 6 of the Chinese Food analysts is that Hunan New WellfulLtd is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of CN¥996m in 2025. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 89%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Hunan New WellfulLtd's growth isn’t the focus of this broad overview, but, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Hunan New WellfulLtd is its debt-to-equity ratio of 101%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Hunan New WellfulLtd, so if you are interested in understanding the company at a deeper level, take a look at Hunan New WellfulLtd's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is Hunan New WellfulLtd 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 Hunan New WellfulLtd 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 Hunan New WellfulLtd’s board and the CEO’s background.
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.

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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.