Kingsoft Cloud Holdings Limited's (NASDAQ:KC) Shift From Loss To Profit

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 US$11b market-cap company posted a loss in its most recent financial year of CN¥1.2b and a latest trailing-twelve-month loss of CN¥1.2b leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Kingsoft Cloud Holdings' 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 Kingsoft Cloud Holdings

According to the 12 industry analysts covering Kingsoft Cloud Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of CN¥1.0b in 2023. The company is therefore projected to breakeven around 2 years from today. 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 55%, which is extremely buoyant. 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 Kingsoft Cloud Holdings given that this is a high-level summary, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, 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 important aspects you should further research:

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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