Breakeven Is Near for NuEnergy Gas Limited (ASX:NGY)

With the business potentially at an important milestone, we thought we'd take a closer look at NuEnergy Gas Limited's (ASX:NGY) future prospects. NuEnergy Gas Limited, an independent clean energy company, engages in the exploration, appraisal, and development of coal bed methane gas projects in Indonesia. With the latest financial year loss of AU$807k and a trailing-twelve-month loss of AU$1.0m, the AU$39m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on NuEnergy Gas' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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According to some industry analysts covering NuEnergy Gas, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$1.1m in 2025. The company is therefore projected to breakeven around a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 101% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of NuEnergy Gas' upcoming projects, 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.

Check out our latest analysis for NuEnergy Gas

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 15% 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:

This article is not intended to be a comprehensive analysis on NuEnergy Gas, so if you are interested in understanding the company at a deeper level, take a look at NuEnergy Gas' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has NuEnergy Gas' 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.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NuEnergy Gas' board and the CEO’s background.
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.

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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.