KHVATEC Co.,Ltd. (KOSDAQ:060720) On The Verge Of Breaking Even

We feel now is a pretty good time to analyse KHVATEC Co.,Ltd.'s (KOSDAQ:060720) business as it appears the company may be on the cusp of a considerable accomplishment. KHVATEC Co.,Ltd. manufactures and sells ICT components and modules worldwide. The ₩450b market-cap company posted a loss in its most recent financial year of ₩509m and a latest trailing-twelve-month loss of ₩5.2b leading to an even wider gap between loss and breakeven. The most pressing concern for investors is KHVATECLtd'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 KHVATECLtd

Consensus from 3 of the South Korean Electronic analysts is that KHVATECLtd is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of ₩31b in 2021. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 99%, 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 KHVATECLtd's growth isn’t the focus of this broad overview, however, take into account that typically 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 KHVATECLtd is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in KHVATECLtd's case is 46%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of KHVATECLtd 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 KHVATECLtd, take a look at KHVATECLtd's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Valuation: What is KHVATECLtd 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 KHVATECLtd 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 KHVATECLtd’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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