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We feel now is a pretty good time to analyse Huize Holding Limited's (NASDAQ:HUIZ) business as it appears the company may be on the cusp of a considerable accomplishment. Huize Holding Limited, together with its subsidiaries, offers insurance brokerage services in the People’s Republic of China. With the latest financial year loss of CN¥21m and a trailing-twelve-month loss of CN¥61m, the US$100m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Huize Holding's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 2 industry analysts covering Huize Holding, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CN¥23m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 160% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Huize Holding's upcoming projects, but, bear in mind that typically 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 39% 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.
This article is not intended to be a comprehensive analysis on Huize Holding, so if you are interested in understanding the company at a deeper level, take a look at Huize Holding's company page on Simply Wall St. We've also put together a list of key factors you should further research:
Historical Track Record: What has Huize Holding'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Huize Holding's board and the CEO’s background.
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.
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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