Yongnam Holdings Limited's (SGX:AXB): Yongnam Holdings Limited, an investment holding company, provides engineering and construction services in Singapore, Hong Kong, and rest of Asia Pacific. On 31 December 2019, the S$42m market-cap posted a loss of -S$53.1m for its most recent financial year. As path to profitability is the topic on AXB’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for AXB.
Expectation from Construction analysts is AXB is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of S$4.3m in 2021. AXB is therefore projected to breakeven around a couple of months from now! How fast will AXB have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 106% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for AXB given that this is a high-level summary, but, 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.
One thing I would like to bring into light with AXB is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in AXB’s case is 64%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of AXB to cover in one brief article, but the key fundamentals for the company can all be found in one place – AXB’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:
- Valuation: What is AXB 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 AXB is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Yongnam Holdings’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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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