HMM Co.,Ltd's (KRX:011200) About To Shift From Loss To Profit

HMM Co.,Ltd (KRX:011200) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. HMM Co.,Ltd, an integrated logistics company, provides shipping and logistic services worldwide. With the latest financial year loss of ₩650b and a trailing-twelve-month loss of ₩182b, the ₩4.7t market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on HMMLtd's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for HMMLtd

HMMLtd is bordering on breakeven, according to the 5 South Korean Shipping analysts. They expect the company to post a final loss in 2020, before turning a profit of ₩1.3t 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 82% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for HMMLtd given that this is a high-level summary, however, take into account 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 HMMLtd is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in HMMLtd's case is 69%. 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 HMMLtd to cover in one brief article, but the key fundamentals for the company can all be found in one place – HMMLtd's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

1. Valuation: What is HMMLtd 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 HMMLtd 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 HMMLtd’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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