Market Sentiment Around Loss-Making MicroPort CardioFlow Medtech Corporation (HKG:2160)

We feel now is a pretty good time to analyse MicroPort CardioFlow Medtech Corporation's (HKG:2160) business as it appears the company may be on the cusp of a considerable accomplishment. MicroPort CardioFlow Medtech Corporation, a medical device company, focuses on the research, development, and commercialization of transcatheter and surgical solutions for valvular heart diseases in the People’s Republic of China. The HK$42b market-cap company announced a latest loss of CN¥398m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on MicroPort CardioFlow Medtech's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for MicroPort CardioFlow Medtech

MicroPort CardioFlow Medtech is bordering on breakeven, according to the 3 Hong Kong Medical Equipment analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of CN¥82m in 2022. Therefore, the company is expected 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for MicroPort CardioFlow Medtech given that this is a high-level summary, however, take into account 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 issue worth mentioning. MicroPort CardioFlow Medtech currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

This article is not intended to be a comprehensive analysis on MicroPort CardioFlow Medtech, so if you are interested in understanding the company at a deeper level, take a look at MicroPort CardioFlow Medtech's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is MicroPort CardioFlow Medtech 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 MicroPort CardioFlow Medtech 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 MicroPort CardioFlow Medtech’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. 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.
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