China Rapid Finance Limited’s (NYSE:XRF): China Rapid Finance Limited, through its subsidiaries, provides a consumer lending marketplace for lenders and borrowers in the People’s Republic of China. The US$156m market-cap posted a loss in its most recent financial year of -US$121.6m and a latest trailing-twelve-month loss of -US$49.0m shrinking the gap between loss and breakeven. As path to profitability is the topic on XRF’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for XRF’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering XRF, breakeven is near. They expect the company to post a final loss in 2018, before turning a profit of US$11m in 2019. XRF is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which XRF must grow year-on-year. It turns out an average annual growth rate of 105% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, XRF may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of XRF’s upcoming projects, though, 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 I wrap up, there’s one aspect worth mentioning. XRF currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that XRF has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of XRF 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 XRF, take a look at XRF’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:
- Historical Track Record: What has XRF’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on China Rapid Finance’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.