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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. The S$82m market-cap company announced a latest loss of -S$51.0m on 31 December 2018 for its most recent financial year result. 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.

View our latest analysis for Yongnam Holdings

AXB is bordering on breakeven, according to Construction analysts. They expect the company to post a final loss in 2019, before turning a profit of S$19m in 2020. So, AXB is predicted to breakeven approximately a few months from now. How fast will AXB have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 97% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, AXB may become profitable much later than analysts predict.

Underlying developments driving AXB’s growth isn’t the focus of this broad overview, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. AXB currently has a 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 57%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of AXB which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at AXB, take a look at AXB’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further research:

1. 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.

2. 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.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.