With the business potentially at an important milestone, we thought we'd take a closer look at Suzhou Centec Communications Co., Ltd.'s (SHSE:688702) future prospects. Suzhou Centec Communications Co., Ltd. provides ethernet switch silicon products and network solutions for 5G, cloud computing, machine learning and industrial markets. The CN¥18b market-cap company announced a latest loss of CN¥20m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which Suzhou Centec Communications will turn a profit, with the big question being "when will the company breakeven?" We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

According to some industry analysts covering Suzhou Centec Communications, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of CN¥102m in 2025. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 100% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

One thing we would like to bring into light with Suzhou Centec Communications is its relatively high level of debt. Generally, the rule of thumb is debt shouldn't exceed 40% of your equity, which in Suzhou Centec Communications' case is 47%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Suzhou Centec Communications 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 Suzhou Centec Communications, take a look at Suzhou Centec Communications' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

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.