Suzhou Centec Communications Co., Ltd. (SHSE:688702) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Suzhou Centec Communications Co., Ltd. provides ethernet switch silicon products and network solutions for 5G, cloud computing, machine learning and industrial markets. With the latest financial year loss of CN¥20m and a trailing-twelve-month loss of CN¥139m, the CN¥29b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Suzhou Centec Communications' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Suzhou Centec Communications is bordering on breakeven, according to the 2 Chinese Semiconductor analysts. They expect the company to post a final loss in 2024, before turning a profit of CN¥47m in 2025. Therefore, the company is expected to breakeven just over a year from now. 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 126%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Suzhou Centec Communications' growth isn't the focus of this broad overview, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we'd like to point out is that The company has managed its capital prudently, with debt making up 9.9% 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.

Next Steps:

This article is not intended to be a comprehensive analysis on Suzhou Centec Communications, so if you are interested in understanding the company at a deeper level, take a look at Suzhou Centec Communications' company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:

1. Historical Track Record: What has Suzhou Centec Communications' 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 Suzhou Centec Communications' 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.