Yahoo Finance Conrad Asia Energy Ltd.'s (ASX:CRD) Path To Profitability
Conrad Asia Energy Ltd. (ASX:CRD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Conrad Asia Energy Ltd., an energy company, engages in the exploration, appraisal, and development of natural gas projects in Southeast Asia. The AU$178m market-cap company announced a latest loss of US$9.7m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Conrad Asia Energy's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Conrad Asia Energy
Consensus from 3 of the Australian Oil and Gas analysts is that Conrad Asia Energy is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$8.4m in 2026. The company is therefore projected to breakeven around 2 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 54%, which is rather optimistic! 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 Conrad Asia Energy given that this is a high-level summary, however, keep in mind that by and large an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, 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. Conrad Asia Energy currently has no debt on its balance sheet, which is rare for a loss-making oil and gas 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 Conrad Asia Energy, so if you are interested in understanding the company at a deeper level, take a look at Conrad Asia Energy's company page on Simply Wall St. We've also compiled a list of important aspects you should further research:
Valuation: What is Conrad Asia Energy 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 Conrad Asia Energy 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 Conrad Asia Energy’s board and the CEO’s background.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
