Loss-Making Kencoa Aerospace Corporation (KOSDAQ:274090) Expected To Breakeven In The Medium-Term

Kencoa Aerospace Corporation (KOSDAQ:274090) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kencoa Aerospace Corporation provides aerospace products for OEM and top-tier customers in South Korea and the United States. The ₩168b market-cap company announced a latest loss of ₩9.3b on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Kencoa Aerospace's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Kencoa Aerospace

Expectations from some of the South Korean Aerospace & Defense analysts is that Kencoa Aerospace is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of ₩200m in 2022. The company is therefore projected to breakeven just over a year from now. 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 129%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Kencoa Aerospace's growth isn’t the focus of this broad overview, but, 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 issue worth mentioning. Kencoa Aerospace currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Kencoa Aerospace's case is 88%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Kencoa Aerospace 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 Kencoa Aerospace 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 Kencoa Aerospace’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. 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.
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