China Rapid Finance Limited’s (NYSE:XRF): China Rapid Finance Limited, through its subsidiaries, provides a consumer lending marketplace for lenders and borrowers in the People’s Republic of China. The US$156m market-cap posted a loss in its most recent financial year of -US$122m and a latest trailing-twelve-month loss of -US$49m shrinking the gap between loss and breakeven. As path to profitability is the topic on XRF’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for XRF.
XRF is bordering on breakeven, according to Consumer Finance analysts. They anticipate the company to incur a final loss in 2018, before generating positive profits of US$11m in 2019. Therefore, XRF is expected to breakeven roughly a few months from now. How fast will XRF have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 105% 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.
Given this is a high-level overview, I won’t go into details of XRF’s upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. XRF currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that XRF has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of XRF to cover in one brief article, but the key fundamentals for the company can all be found in one place – XRF’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should look at:
- Historical Track Record: What has XRF’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on China Rapid Finance’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.