Venus Medtech (Hangzhou) Inc. (HKG:2500) Is About To Turn The Corner

Venus Medtech (Hangzhou) Inc. (HKG:2500) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Venus Medtech (Hangzhou) Inc. develops and sells transcatheter heart valve medical devices in Mainland China and internationally. The HK$30b market-cap company’s loss lessened since it announced a CN¥381m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥238m, as it approaches breakeven. Many investors are wondering about the rate at which Venus Medtech (Hangzhou) will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Venus Medtech (Hangzhou)

According to the 8 industry analysts covering Venus Medtech (Hangzhou), the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CN¥232m in 2021. Therefore, the company is expected to breakeven roughly a year 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 51%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Venus Medtech (Hangzhou)'s upcoming projects, though, keep in mind that typically 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 prudently, with debt making up 0.03% 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.

Next Steps:

There are key fundamentals of Venus Medtech (Hangzhou) 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 Venus Medtech (Hangzhou), take a look at Venus Medtech (Hangzhou)'s company page on Simply Wall St. We've also put together a list of important aspects you should further research:

1. Valuation: What is Venus Medtech (Hangzhou) 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 Venus Medtech (Hangzhou) 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 Venus Medtech (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. 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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