Loss-Making FIH Mobile Limited (HKG:2038) Set To Breakeven

We feel now is a pretty good time to analyse FIH Mobile Limited's (HKG:2038) business as it appears the company may be on the cusp of a considerable accomplishment. FIH Mobile Limited, an investment holding company, provides integrated manufacturing services for the handset industry worldwide. The HK$9.7b market-cap company posted a loss in its most recent financial year of US$33m and a latest trailing-twelve-month loss of US$49m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on FIH Mobile's 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.

Check out our latest analysis for FIH Mobile

Expectations from some of the Hong Kong Electronic analysts is that FIH Mobile is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$68m in 2021. So, the company is predicted to breakeven approximately 12 months 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 96%, 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 FIH Mobile given that this is a high-level summary, but, bear in mind that typically 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 FIH Mobile is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in FIH Mobile's case is 44%. 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 too many aspects of FIH Mobile to cover in one brief article, but the key fundamentals for the company can all be found in one place – FIH Mobile's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is FIH Mobile 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 FIH Mobile 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 FIH Mobile’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. 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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