We Might See A Profit From Archosaur Games Inc. (HKG:9990) Soon

We feel now is a pretty good time to analyse Archosaur Games Inc.'s (HKG:9990) business as it appears the company may be on the cusp of a considerable accomplishment. Archosaur Games Inc., an investment holding company, develops and operates mobile games in Mainland China and internationally. The HK$870m market-cap company announced a latest loss of CN¥316m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Archosaur Games' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Archosaur Games

Archosaur Games is bordering on breakeven, according to some Hong Kong Entertainment analysts. They expect the company to post a final loss in 2023, before turning a profit of CN¥23m in 2024. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 142% 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 Archosaur Games given that this is a high-level summary, though, bear 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. Archosaur Games currently has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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 Archosaur Games, so if you are interested in understanding the company at a deeper level, take a look at Archosaur Games' company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

1. Valuation: What is Archosaur Games 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 Archosaur Games 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 Archosaur Games’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.