Loss-Making Suzhou Centec Communications Co., Ltd. (SHSE:688702) Set To Breakeven

With the business potentially at an important milestone, we thought we'd take a closer look at Suzhou Centec Communications Co., Ltd.'s (SHSE:688702) future prospects. Suzhou Centec Communications Co., Ltd. provides ethernet switch silicon products and network solutions for 5G, cloud computing, machine learning and industrial markets. The CN¥13b market-cap company posted a loss in its most recent financial year of CN¥20m and a latest trailing-twelve-month loss of CN¥112m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Suzhou Centec Communications' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Suzhou Centec Communications

Expectations from some of the Chinese Semiconductor analysts is that Suzhou Centec Communications is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of CN¥9.8m in 2024. So, the company is predicted to breakeven approximately a year 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 169% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Suzhou Centec Communications given that this is a high-level summary, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 15% of equity. This means that it 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:

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

1. Historical Track Record: What has Suzhou Centec Communications' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Suzhou Centec Communications' 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.