Loss-Making DPC Dash Ltd (HKG:1405) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse DPC Dash Ltd's (HKG:1405) business as it appears the company may be on the cusp of a considerable accomplishment. DPC Dash Ltd, together with its subsidiaries, operates a chain of fast-food restaurants in the People’s Republic of China. The HK$7.4b market-cap company posted a loss in its most recent financial year of CN¥223m and a latest trailing-twelve-month loss of CN¥118m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which DPC Dash will turn a profit, with the big question being “when will the company breakeven?” 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 DPC Dash

DPC Dash is bordering on breakeven, according to the 10 Hong Kong Hospitality analysts. They expect the company to post a final loss in 2024, before turning a profit of CN¥122m in 2025. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 112% 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 DPC Dash given that this is a high-level summary, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 9.5% 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:

There are too many aspects of DPC Dash to cover in one brief article, but the key fundamentals for the company can all be found in one place – DPC Dash's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Valuation: What is DPC Dash 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 DPC Dash 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 DPC Dash’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.