Champion Real Estate Investment Trust (HKG:2778) Could Be Less Than A Year Away From Profitability

By
Simply Wall St
Published
February 24, 2022
SEHK:2778
Source: Shutterstock

Champion Real Estate Investment Trust (HKG:2778) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Champion Real Estate Investment Trust is a trust formed to own and invest in income- producing office and retail properties. The HK$22b market-cap company announced a latest loss of HK$831m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Champion Real Estate Investment Trust's 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.

See our latest analysis for Champion Real Estate Investment Trust

Champion Real Estate Investment Trust is bordering on breakeven, according to the 10 Hong Kong REITs analysts. They expect the company to post a final loss in 2021, before turning a profit of HK$1.3b in 2022. The company is therefore projected to breakeven around 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 71%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
SEHK:2778 Earnings Per Share Growth February 24th 2022

Underlying developments driving Champion Real Estate Investment Trust's growth isn’t the focus of this broad overview, however, 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 31% 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 too many aspects of Champion Real Estate Investment Trust to cover in one brief article, but the key fundamentals for the company can all be found in one place – Champion Real Estate Investment Trust's company page on Simply Wall St. We've also put together a list of important factors you should further research:

  1. Valuation: What is Champion Real Estate Investment Trust 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 Champion Real Estate Investment Trust 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 Champion Real Estate Investment Trust’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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