Lianlian DigiTech Co., Ltd. (HKG:2598) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lianlian DigiTech Co., Ltd., together with its subsidiaries, provides digital payment services and value-added services to small and midsized merchants and enterprises in China. The HK$11b market-cap company posted a loss in its most recent financial year of CN¥656m and a latest trailing-twelve-month loss of CN¥624m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Lianlian DigiTech 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.

Lianlian DigiTech is bordering on breakeven, according to the 3 Hong Kong Diversified Financial analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of CN¥31m in 2025. The company is therefore projected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 96%, which is rather optimistic! 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 Lianlian DigiTech's upcoming projects, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Lianlian DigiTech is its relatively high level of debt. Typically, debt shouldn't exceed 40% of your equity, which in Lianlian DigiTech's case is 52%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Lianlian DigiTech 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 Lianlian DigiTech, take a look at Lianlian DigiTech's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Historical Track Record: What has Lianlian DigiTech'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.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lianlian DigiTech's board and the CEO's background.
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.

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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.