Loss-Making Next Entertainment World Co., Ltd. (KOSDAQ:160550) Set To Breakeven

Next Entertainment World Co., Ltd. (KOSDAQ:160550) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Next Entertainment World Co., Ltd. operates as a content distribution company in South Korea. The ₩276b market-cap company posted a loss in its most recent financial year of ₩8.6b and a latest trailing-twelve-month loss of ₩7.2b shrinking the gap between loss and breakeven. As path to profitability is the topic on Next Entertainment World's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Next Entertainment World

According to the 2 industry analysts covering Next Entertainment World, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of ₩8.0b in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 115% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Next Entertainment World given that this is a high-level summary, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Next Entertainment World is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Next Entertainment World's case is 49%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Next Entertainment World, so if you are interested in understanding the company at a deeper level, take a look at Next Entertainment World's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is Next Entertainment World 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 Next Entertainment World 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 Next Entertainment World’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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