Yidu Tech Inc. (HKG:2158): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at Yidu Tech Inc.'s (HKG:2158) future prospects. Yidu Tech Inc. provides healthcare solutions built on big data and artificial intelligence technologies in Mainland China, Brunei, and internationally. On 31 March 2023, the HK$5.0b market-cap company posted a loss of CN¥628m for its most recent financial year. Many investors are wondering about the rate at which Yidu Tech 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.

See our latest analysis for Yidu Tech

Consensus from 5 of the Hong Kong Healthcare Services analysts is that Yidu Tech is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of CN¥54m in 2026. So, the company is predicted to breakeven approximately 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 66%, which is extremely buoyant. 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 Yidu Tech's upcoming projects, but, keep in mind that generally a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. So, 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 Yidu Tech has no debt on its balance sheet, which is rare for a loss-making healthcare tech 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:

There are key fundamentals of Yidu Tech 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 Yidu Tech, take a look at Yidu Tech's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. Valuation: What is Yidu Tech 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 Yidu Tech 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 Yidu Tech’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.