Arrail Group Limited (HKG:6639) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Arrail Group Limited operates dental hospitals and clinics in China. The HK$3.8b market-cap company announced a latest loss of CN¥701m on 31 March 2022 for its most recent financial year result. The most pressing concern for investors is Arrail Group's 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.

See our latest analysis for Arrail Group

Arrail Group is bordering on breakeven, according to the 3 Hong Kong Healthcare analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥37m in 2023. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 116% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Arrail Group given that this is a high-level summary, 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 judiciously, with debt making up 8.5% 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 Arrail Group, so if you are interested in understanding the company at a deeper level, take a look at Arrail Group's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is Arrail Group worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Arrail Group is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Arrail Group'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.