Television Broadcasts Limited's (HKG:511) Has Found A Path To Profitability

By
Simply Wall St
Published
May 23, 2021
SEHK:511
Source: Shutterstock

Television Broadcasts Limited (HKG:511) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Television Broadcasts Limited, together with its subsidiaries, engages in terrestrial television broadcasting, program production, and other television-related activities. On 31 December 2020, the HK$3.4b market-cap company posted a loss of HK$281m for its most recent financial year. As path to profitability is the topic on Television Broadcasts' investors mind, we've decided to gauge market sentiment. 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 Television Broadcasts

Television Broadcasts is bordering on breakeven, according to some Hong Kong Media analysts. They expect the company to post a final loss in 2020, before turning a profit of HK$161m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 128% 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.

earnings-per-share-growth
SEHK:511 Earnings Per Share Growth May 24th 2021

Given this is a high-level overview, we won’t go into details of Television Broadcasts' upcoming projects, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Television Broadcasts is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Television Broadcasts' case is 71%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Television Broadcasts 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 Television Broadcasts, take a look at Television Broadcasts' company page on Simply Wall St. We've also put together a list of key factors you should further research:

  1. Historical Track Record: What has Television Broadcasts' 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 Television Broadcasts' 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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