TSEC Corporation's (TPE:6443) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at TSEC Corporation's (TPE:6443) future prospects. TSEC Corporation engages in the production and sale of solar cells and modules in Taiwan, Japan, the United States, Europe, China, and internationally. The NT$21b market-cap company announced a latest loss of NT$286m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which TSEC will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for TSEC

According to some industry analysts covering TSEC, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of NT$821m in 2021. So, the company is predicted to breakeven approximately 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 94% is expected, which is rather optimistic! 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 TSEC given that this is a high-level summary, but, keep in mind 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 TSEC is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in TSEC's case is 78%. 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 key fundamentals of TSEC 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 TSEC, take a look at TSEC's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is TSEC 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 TSEC 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 TSEC’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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