We feel now is a pretty good time to analyse Velesto Energy Berhad's (KLSE:VELESTO) business as it appears the company may be on the cusp of a considerable accomplishment. Velesto Energy Berhad, an investment holding company, provides drilling and oilfield services in Malaysia and internationally. The RM1.6b market-cap company announced a latest loss of RM100m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Velesto Energy Berhad will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Velesto Energy Berhad
Consensus from 7 of the Malaysian Energy Services analysts is that Velesto Energy Berhad is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of RM103m in 2023. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 73%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Velesto Energy Berhad given that this is a high-level summary, but, take into account that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 25% 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 Velesto Energy Berhad 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 Velesto Energy Berhad, take a look at Velesto Energy Berhad's company page on Simply Wall St. We've also put together a list of important factors you should further research:
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Valuation: What is Velesto Energy Berhad 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 Velesto Energy Berhad 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 Velesto Energy Berhad’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.