Huize Holding Limited (NASDAQ:HUIZ) Could Be Less Than A Year Away From Profitability
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. The US$62m market-cap company’s loss lessened since it announced a CN¥108m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥19m, as it approaches breakeven. Many investors are wondering about the rate at which Huize Holding will turn a profit, with the big question being “when will the company breakeven?” 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 Huize Holding
According to the 2 industry analysts covering Huize Holding, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥31m in 2023. So, the company is predicted to breakeven approximately 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 100%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Huize Holding's growth isn’t the focus of this broad overview, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Huize Holding is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Huize Holding's case is 62%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Huize Holding which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Huize Holding, take a look at Huize Holding's company page on Simply Wall St. We've also compiled a list of pertinent aspects 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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