Hong Kong Television Network Limited's (HKG:1137): Hong Kong Television Network Limited, together with its subsidiaries, engages in the multimedia business in Hong Kong. The HK$4.3b market-cap company announced a latest loss of -HK$289.9m on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is 1137’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for 1137’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering 1137, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of HK$33m in 2021. Therefore, 1137 is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which 1137 must grow year-on-year. It turns out an average annual growth rate of 105% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, 1137 may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for 1137 given that this is a high-level summary, however, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. 1137 has managed its capital judiciously, with debt making up 22% of equity. This means that 1137 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 1137, so if you are interested in understanding the company at a deeper level, take a look at 1137’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should look at:
- Historical Track Record: What has 1137'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 Hong Kong Television Network’s board and the CEO’s back ground.
- 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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