Kingdee International Software Group Company Limited (HKG:268): When Will It Breakeven?

Kingdee International Software Group Company Limited (HKG:268) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kingdee International Software Group Company Limited, an investment holding company, engages in the enterprise resource planning business. The HK$39b market-cap company’s loss lessened since it announced a CN¥389m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥316m, as it approaches breakeven. The most pressing concern for investors is Kingdee International Software Group'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 Kingdee International Software Group

Consensus from 26 of the Hong Kong Software analysts is that Kingdee International Software Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of CN¥278m in 2025. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 46%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Kingdee International Software Group's upcoming projects, however, 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 9.9% 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 Kingdee International Software Group, so if you are interested in understanding the company at a deeper level, take a look at Kingdee International Software Group's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is Kingdee International Software 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 Kingdee International Software 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 Kingdee International Software 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.