Sinocelltech Group Limited (SHSE:688520) On The Verge Of Breaking Even

With the business potentially at an important milestone, we thought we'd take a closer look at Sinocelltech Group Limited's (SHSE:688520) future prospects. Sinocelltech Group Limited, a biotech company, engages in the research and development, and industrialization of recombinant proteins, monoclonal antibodies, and vaccines in China. The CN¥18b market-cap company’s loss lessened since it announced a CN¥396m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥169m, as it approaches breakeven. Many investors are wondering about the rate at which Sinocelltech Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Sinocelltech Group

Sinocelltech Group is bordering on breakeven, according to some Chinese Biotechs analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥283m in 2024. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 120% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Sinocelltech Group's upcoming projects, however, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Sinocelltech Group is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of Sinocelltech Group which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Sinocelltech Group, take a look at Sinocelltech Group's company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:

1. Valuation: What is Sinocelltech Group 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 Sinocelltech Group 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 Sinocelltech Group’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com