Loss-Making Synertec Corporation Limited (ASX:SOP) Expected To Breakeven In The Medium-Term

By
Simply Wall St
Published
November 18, 2021
ASX:SOP
Source: Shutterstock

With the business potentially at an important milestone, we thought we'd take a closer look at Synertec Corporation Limited's (ASX:SOP) future prospects. Synertec Corporation Limited provides engineering-based technology and services in Australia. The AU$29m market-cap company announced a latest loss of AU$3.4m on 30 June 2021 for its most recent financial year result. Many investors are wondering about the rate at which Synertec 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.

Check out our latest analysis for Synertec

Expectations from some of the Australian Professional Services analysts is that Synertec is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$300k in 2024. So, the company is predicted to breakeven approximately 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
ASX:SOP Earnings Per Share Growth November 19th 2021

We're not going to go through company-specific developments for Synertec given that this is a high-level summary, however, keep in mind that generally 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. Synertec currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

  1. Historical Track Record: What has Synertec's 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 Synertec'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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