Hyosung Advanced Materials Corporation's (KRX:298050) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Hyosung Advanced Materials Corporation's (KRX:298050) future prospects. Hyosung Advanced Materials Corporation manufactures and sells industrial, polyester, nylon, and carpet yarns in South Korea and internationally. The ₩697b market-cap company posted a loss in its most recent financial year of ₩70b and a latest trailing-twelve-month loss of ₩67b shrinking the gap between loss and breakeven. The most pressing concern for investors is Hyosung Advanced Materials' 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.

View our latest analysis for Hyosung Advanced Materials

According to the 4 industry analysts covering Hyosung Advanced Materials, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of ₩58b in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 105% 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.

Given this is a high-level overview, we won’t go into details of Hyosung Advanced Materials' upcoming projects, though, 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.

One thing we would like to bring into light with Hyosung Advanced Materials is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 key fundamentals of Hyosung Advanced Materials which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Hyosung Advanced Materials, take a look at Hyosung Advanced Materials' company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is Hyosung Advanced Materials 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 Hyosung Advanced Materials 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 Hyosung Advanced Materials’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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