We feel now is a pretty good time to analyse Kinatico Ltd's (ASX:KYP) business as it appears the company may be on the cusp of a considerable accomplishment. Kinatico Ltd provides pre-employment screening, verification, and workforce compliance management services in Australia and New Zealand. With the latest financial year loss of AU$1.5m and a trailing-twelve-month loss of AU$1.9m, the AU$48m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Kinatico's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Kinatico
Consensus from 2 of the Australian IT analysts is that Kinatico is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$1.0m in 2024. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which signals high confidence from analysts. 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 Kinatico given that this is a high-level summary, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. Kinatico currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on Kinatico, so if you are interested in understanding the company at a deeper level, take a look at Kinatico's company page on Simply Wall St. We've also put together a list of important aspects you should further research:
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Valuation: What is Kinatico 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 Kinatico is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kinatico’s board and the CEO’s background.
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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.