Kingsoft Cloud Holdings Limited (NASDAQ:KC): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at Kingsoft Cloud Holdings Limited's (NASDAQ:KC) future prospects. Kingsoft Cloud Holdings Limited provides cloud services to businesses and organizations in China. The company’s loss has recently broadened since it announced a CN¥1.2b loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥1.2b, moving it further away from breakeven. The most pressing concern for investors is Kingsoft Cloud Holdings' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Kingsoft Cloud Holdings

According to the 9 industry analysts covering Kingsoft Cloud Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥930m in 2023. So, the company is predicted to breakeven approximately 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 60%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Kingsoft Cloud Holdings' growth isn’t the focus of this broad overview, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 4.8% 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 Kingsoft Cloud Holdings 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 Kingsoft Cloud Holdings, take a look at Kingsoft Cloud Holdings' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Historical Track Record: What has Kingsoft Cloud Holdings' 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.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kingsoft Cloud Holdings' 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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