Loss-Making Conrad Asia Energy Ltd. (ASX:CRD) Set To Breakeven

Conrad Asia Energy Ltd. (ASX:CRD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Conrad Asia Energy Ltd., an energy company, engages in the exploration, appraisal, and development of natural gas projects in Southeast Asia. The AU$151m market-cap company announced a latest loss of US$9.7m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Conrad Asia Energy's path to profitability – when will it 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 Conrad Asia Energy

Consensus from 3 of the Australian Oil and Gas analysts is that Conrad Asia Energy is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$34m in 2024. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 37%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Conrad Asia Energy's growth isn’t the focus of this broad overview, however, bear in mind that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Conrad Asia Energy has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which typically has high 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:

This article is not intended to be a comprehensive analysis on Conrad Asia Energy, so if you are interested in understanding the company at a deeper level, take a look at Conrad Asia Energy's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

1. Valuation: What is Conrad Asia Energy 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 Conrad Asia Energy 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 Conrad Asia Energy’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.