When Will MicroTech Medical (Hangzhou) Co., Ltd. (HKG:2235) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at MicroTech Medical (Hangzhou) Co., Ltd.'s (HKG:2235) future prospects. MicroTech Medical (Hangzhou) Co., Ltd. engages in the research and development, manufacture, and commercialization of diabetes management medical devices and consumables in the People’s Republic of China and internationally. The HK$1.7b market-cap company posted a loss in its most recent financial year of CN¥35m and a latest trailing-twelve-month loss of CN¥46m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is MicroTech Medical (Hangzhou)'s path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for MicroTech Medical (Hangzhou)

MicroTech Medical (Hangzhou) is bordering on breakeven, according to the 3 Hong Kong Medical Equipment analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of CN¥25m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 82% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving MicroTech Medical (Hangzhou)'s growth isn’t the focus of this broad overview, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. MicroTech Medical (Hangzhou) currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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 MicroTech Medical (Hangzhou), so if you are interested in understanding the company at a deeper level, take a look at MicroTech Medical (Hangzhou)'s company page on Simply Wall St. We've also put together a list of important factors you should further examine:

1. Historical Track Record: What has MicroTech Medical (Hangzhou)'s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on MicroTech Medical (Hangzhou)'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.