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Breakeven Is Near for CanSino Biologics Inc. (HKG:6185)
CanSino Biologics Inc. ( HKG:6185 ) is possibly approaching a major achievement in its business, so we would like to...
CanSino Biologics Inc. (HKG:6185) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. CanSino Biologics Inc. develops, manufactures, and commercializes vaccines in the People’s Republic of China. The HK$117b market-cap company’s loss lessened since it announced a CN¥397m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥388m, as it approaches breakeven. Many investors are wondering about the rate at which CanSino Biologics 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 CanSino Biologics
CanSino Biologics is bordering on breakeven, according to the 6 Hong Kong Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of CN¥8.4b in 2021. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 23% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for CanSino Biologics given that this is a high-level summary, but, bear in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, 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 5.0% 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.
