Loss-Making SinoMab BioScience Limited (HKG:3681) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse SinoMab BioScience Limited's (HKG:3681) business as it appears the company may be on the cusp of a considerable accomplishment. SinoMab BioScience Limited, a biopharmaceutical company, engages in the research, development, manufacture, and commercialization of therapeutics for the treatment of immunological diseases, primarily mAb-based biologics. With the latest financial year loss of CN¥276m and a trailing-twelve-month loss of CN¥311m, the HK$3.0b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which SinoMab BioScience 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.

View our latest analysis for SinoMab BioScience

Expectations from some of the Hong Kong Biotechs analysts is that SinoMab BioScience is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥66m in 2023. So, the company is predicted to breakeven approximately 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for SinoMab BioScience given that this is a high-level summary, however, take into account that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 5.3% 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:

This article is not intended to be a comprehensive analysis on SinoMab BioScience, so if you are interested in understanding the company at a deeper level, take a look at SinoMab BioScience's company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:

1. Historical Track Record: What has SinoMab BioScience'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 SinoMab BioScience'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.

When trading SinoMab BioScience or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.