With the business potentially at an important milestone, we thought we'd take a closer look at Nayuki Holdings Limited's (HKG:2150) future prospects. Nayuki Holdings Ltd., an investment holding company, operates a chain of teahouses in China. The HK$13b market-cap company posted a loss in its most recent financial year of CN¥202m and a latest trailing-twelve-month loss of CN¥4.4b leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Nayuki Holdings' 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.
Consensus from 10 of the Hong Kong Hospitality analysts is that Nayuki Holdings is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of CN¥311m in 2022. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 65% is expected, 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 Nayuki Holdings' upcoming projects, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.008% 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.
There are too many aspects of Nayuki Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Nayuki Holdings' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:
- Valuation: What is Nayuki Holdings 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 Nayuki Holdings is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nayuki Holdings’s board and the CEO’s background.
- 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.