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 company's loss has recently broadened since it announced a CN¥20m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥41m, moving it further away from breakeven. As path to profitability is the topic on Suzhou Centec Communications' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts' expectations for the company.

Consensus from 2 of the Chinese Semiconductor analysts is that Suzhou Centec Communications is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of CN¥9.8m in 2024. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 101% is expected, which is extremely buoyant. 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, though, bear in mind that typically 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 16% 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:

There are too many aspects of Suzhou Centec Communications to cover in one brief article, but the key fundamentals for the company can all be found in one place – Suzhou Centec Communications' company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com