We're Interested To See How Haisung Aero-Robotics (KOSDAQ:059270) Uses Its Cash Hoard To Grow

There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although software-as-a-service business Salesforce.com lost money for years while it grew recurring revenue, if you held shares since 2005, you'd have done very well indeed. But while history lauds those rare successes, those that fail are often forgotten; who remembers Pets.com?

So should Haisung Aero-Robotics (KOSDAQ:059270) shareholders be worried about its cash burn? In this report, we will consider the company's annual negative free cash flow, henceforth referring to it as the 'cash burn'. First, we'll determine its cash runway by comparing its cash burn with its cash reserves.

View our latest analysis for Haisung Aero-Robotics

How Long Is Haisung Aero-Robotics' Cash Runway?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. When Haisung Aero-Robotics last reported its September 2024 balance sheet in November 2024, it had zero debt and cash worth ₩13b. Importantly, its cash burn was ₩2.5b over the trailing twelve months. Therefore, from September 2024 it had 5.2 years of cash runway. While this is only one measure of its cash burn situation, it certainly gives us the impression that holders have nothing to worry about. The image below shows how its cash balance has been changing over the last few years.

Is Haisung Aero-Robotics' Revenue Growing?

Given that Haisung Aero-Robotics actually had positive free cash flow last year, before burning cash this year, we'll focus on its operating revenue to get a measure of the business trajectory. While it's not that amazing, we still think that the 5.5% increase in revenue from operations was a positive. Of course, we've only taken a quick look at the stock's growth metrics, here. This graph of historic earnings and revenue shows how Haisung Aero-Robotics is building its business over time.

Can Haisung Aero-Robotics Raise More Cash Easily?

Notwithstanding Haisung Aero-Robotics' revenue growth, it is still important to consider how it could raise more money, if it needs to. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Many companies end up issuing new shares to fund future growth. We can compare a company's cash burn to its market capitalisation to get a sense for how many new shares a company would have to issue to fund one year's operations.

Haisung Aero-Robotics' cash burn of ₩2.5b is about 3.7% of its ₩68b market capitalisation. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money.

How Risky Is Haisung Aero-Robotics' Cash Burn Situation?

As you can probably tell by now, we're not too worried about Haisung Aero-Robotics' cash burn. For example, we think its cash runway suggests that the company is on a good path. Its weak point is its revenue growth, but even that wasn't too bad! Looking at all the measures in this article, together, we're not worried about its rate of cash burn; the company seems well on top of its medium-term spending needs. An in-depth examination of risks revealed 3 warning signs for Haisung Aero-Robotics that readers should think about before committing capital to this stock.

Of course Haisung Aero-Robotics may not be the best stock to buy. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.