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Market Sentiment Around Loss-Making CanSino Biologics Inc. (HKG:6185)

Simply Wall St

CanSino Biologics Inc.'s (HKG:6185): CanSino Biologics Inc. focuses on developing, manufacturing, and commercializing vaccines in the People’s Republic of China. The HK$13b market-cap posted a loss in its most recent financial year of -CN¥138.3m and a latest trailing-twelve-month loss of -CN¥156.5m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which 6185 will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for 6185’s growth and when analysts expect the company to become profitable.

See our latest analysis for CanSino Biologics

According to the 4 industry analysts covering 6185, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of CN¥55m in 2020. 6185 is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which 6185 must grow year-on-year. It turns out an average annual growth rate of 88% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

SEHK:6185 Past and Future Earnings, December 30th 2019

I’m not going to go through company-specific developments for 6185 given that this is a high-level summary, however, take into account that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing I’d like to point out is that 6185 has managed its capital judiciously, with debt making up 9.6% of equity. This means that 6185 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 6185 to cover in one brief article, but the key fundamentals for the company can all be found in one place – 6185’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:

  1. Valuation: What is 6185 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 6185 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 CanSino Biologics’s board and the CEO’s back ground.
  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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