the phrase "doubt on the Group's ability to continue as a going concern" is definitely NOT a standard caveat clause that usually gets put in company outlook statements.
I think it shows how finely poised things are between revenue growth and cash burn. Yes they are growing as the bulls will point out. But also they are burning cash to do it, as the more bearish view will point out.
I am still more in the latter camp because their pathway to profitability is based on unrealistic assumptions. First off, they are forecasting not being able to improve their gross margin in FY25. So they can only get to profitability by growing revenue and hoping for no more one-off costs. I think they can grow revenue in China by 50% off still a relatively small base. I am sceptical they can grow USA revenue a further 50%, i.e. a faster growth rate to then they have achieved already, without further significant investments such as in marketing.
But an even bigger issue is that their pathway for profitability requires you to believe that they will incur NO major one-off costs (e.g. FDA regulatory, litigation costs, manufacturing infrastructure costs, inventory writedowns, system upgrades etc.). It also assumes no other headwinds such as exchange rates etc.
The statement about potentially not being able to continue as a going concern is definitely there for a reason, next time you see it it will be attached to a capital raise.
BUB Price at posting:
12.5¢ Sentiment: Hold Disclosure: Not Held
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