Stock Analysis

JW (Cayman) Therapeutics Co. Ltd (HKG:2126): When Will It Breakeven?

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We feel now is a pretty good time to analyse JW (Cayman) Therapeutics Co. Ltd's (HKG:2126) business as it appears the company may be on the cusp of a considerable accomplishment. JW (Cayman) Therapeutics Co. Ltd, a clinical stage cell therapy company, focuses on developing, manufacturing, and commercializing cell-based immunotherapies for hematological cancers and solid tumors. The company’s loss has recently broadened since it announced a CN¥633m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥925m, moving it further away from breakeven. Many investors are wondering about the rate at which JW (Cayman) Therapeutics will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for JW (Cayman) Therapeutics

Consensus from 2 of the Hong Kong Biotechs analysts is that JW (Cayman) Therapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥340m in 2023. The company is therefore projected to breakeven around 2 years from now. 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 57% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

SEHK:2126 Earnings Per Share Growth February 4th 2021

Underlying developments driving JW (Cayman) Therapeutics' growth isn’t the focus of this broad overview, however, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. JW (Cayman) Therapeutics 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:

There are key fundamentals of JW (Cayman) Therapeutics 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 JW (Cayman) Therapeutics, take a look at JW (Cayman) Therapeutics' company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

  1. Historical Track Record: What has JW (Cayman) Therapeutics' 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 JW (Cayman) Therapeutics' 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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