Breakeven Is Near for TrueLight Corporation (GTSM:3234)

TrueLight Corporation (GTSM:3234) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. TrueLight Corporation manufactures and supplies components for local area network, storage area network, fiber to the home, mid-reach access, and metro area network markets in Taiwan. With the latest financial year loss of NT$321m and a trailing-twelve-month loss of NT$98m, the NT$2.8b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is TrueLight'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 TrueLight

According to the 3 industry analysts covering TrueLight, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of NT$146m in 2021. Therefore, the company is expected to breakeven roughly a year 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 163% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving TrueLight's growth isn’t the focus of this broad overview, but, take into account that typically 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 TrueLight is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in TrueLight's case is 87%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of TrueLight to cover in one brief article, but the key fundamentals for the company can all be found in one place – TrueLight's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

1. Valuation: What is TrueLight 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 TrueLight 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 TrueLight’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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