Alam Maritim Resources Berhad's (KLSE:ALAM) Path To Profitability

Alam Maritim Resources Berhad (KLSE:ALAM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Alam Maritim Resources Berhad, an investment holding company, provides marine transportation support services in Malaysia. The company’s loss has recently broadened since it announced a RM79m loss in the full financial year, compared to the latest trailing-twelve-month loss of RM105m, moving it further away from breakeven. As path to profitability is the topic on Alam Maritim Resources Berhad's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Alam Maritim Resources Berhad

Expectations from some of the Malaysian Energy Services analysts is that Alam Maritim Resources Berhad is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of RM6.9m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 104% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Alam Maritim Resources Berhad's growth isn’t the focus of this broad overview, however, keep in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 30% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Alam Maritim Resources Berhad 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 Alam Maritim Resources Berhad, take a look at Alam Maritim Resources Berhad's company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Valuation: What is Alam Maritim Resources Berhad 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 Alam Maritim Resources Berhad 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 Alam Maritim Resources Berhad’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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