AiHuiShou International Co. Ltd. (NYSE:RERE): Is Breakeven Near?

AiHuiShou International Co. Ltd. (NYSE:RERE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. AiHuiShou International Co. Ltd., through its subsidiaries, operates pre-owned consumer electronics transactions and services platform under the ATRenew brand name in the People’s Republic of China. The US$2.0b market-cap company posted a loss in its most recent financial year of CN¥1.8b and a latest trailing-twelve-month loss of CN¥1.9b leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which AiHuiShou International 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.

See our latest analysis for AiHuiShou International

AiHuiShou International is bordering on breakeven, according to the 3 American Online Retail analysts. They expect the company to post a final loss in 2022, before turning a profit of CN¥655m in 2023. The company is therefore projected to breakeven around 2 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 105% year-on-year, on average, which signals high confidence from analysts. 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 AiHuiShou International given that this is a high-level summary, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 3.5% 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 AiHuiShou International, so if you are interested in understanding the company at a deeper level, take a look at AiHuiShou International's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

1. Valuation: What is AiHuiShou International 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 AiHuiShou International 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 AiHuiShou International’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.
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