We Might See A Profit From Nayuki Holdings Limited (HKG:2150) Soon

We feel now is a pretty good time to analyse Nayuki Holdings Limited's (HKG:2150) business as it appears the company may be on the cusp of a considerable accomplishment. Nayuki Holdings Limited, an investment holding company, operates a chain of teahouses in China. The HK$5.2b market-cap company posted a loss in its most recent financial year of CN¥469m and a latest trailing-twelve-month loss of CN¥149m shrinking the gap between loss and breakeven. As path to profitability is the topic on Nayuki Holdings' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Nayuki Holdings

Nayuki Holdings is bordering on breakeven, according to the 14 Hong Kong Hospitality analysts. They expect the company to post a final loss in 2023, before turning a profit of CN¥458m in 2024. 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 53%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Nayuki Holdings' growth isn’t the focus of this broad overview, but, keep in mind 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’d like to point out is that Nayuki Holdings has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on Nayuki Holdings, so if you are interested in understanding the company at a deeper level, take a look at Nayuki Holdings' company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. 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.
2. 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.
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.