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Here's Why We're Watching Oversea Enterprise Berhad's (KLSE:OVERSEA) Cash Burn Situation

Simply Wall St · 6d ago

Just because a business does not make any money, does not mean that the stock will go down. For example, although Amazon.com made losses for many years after listing, if you had bought and held the shares since 1999, you would have made a fortune. Nonetheless, only a fool would ignore the risk that a loss making company burns through its cash too quickly.

So should Oversea Enterprise Berhad (KLSE:OVERSEA) shareholders be worried about its cash burn? For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). Let's start with an examination of the business' cash, relative to its cash burn.

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When Might Oversea Enterprise Berhad Run Out Of Money?

A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. As at September 2025, Oversea Enterprise Berhad had cash of RM16m and no debt. Importantly, its cash burn was RM15m over the trailing twelve months. That means it had a cash runway of around 13 months as of September 2025. That's not too bad, but it's fair to say the end of the cash runway is in sight, unless cash burn reduces drastically. The image below shows how its cash balance has been changing over the last few years.

debt-equity-history-analysis
KLSE:OVERSEA Debt to Equity History February 15th 2026

Check out our latest analysis for Oversea Enterprise Berhad

Is Oversea Enterprise Berhad's Revenue Growing?

We're hesitant to extrapolate on the recent trend to assess its cash burn, because Oversea Enterprise Berhad actually had positive free cash flow last year, so operating revenue growth is probably our best bet to measure, right now. Although it's hardly brilliant growth, it's good to see the company grew revenue by 4.7% in the last year. In reality, this article only makes a short study of the company's growth data. This graph of historic earnings and revenue shows how Oversea Enterprise Berhad is building its business over time.

Can Oversea Enterprise Berhad Raise More Cash Easily?

While Oversea Enterprise Berhad is showing solid revenue growth, it's still worth considering how easily it could raise more cash, even just to fuel faster growth. Issuing new shares, or taking on debt, are the most common ways for a listed company to raise more money for its business. Many companies end up issuing new shares to fund future growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).

Since it has a market capitalisation of RM91m, Oversea Enterprise Berhad's RM15m in cash burn equates to about 17% of its market value. Given that situation, it's fair to say the company wouldn't have much trouble raising more cash for growth, but shareholders would be somewhat diluted.

How Risky Is Oversea Enterprise Berhad's Cash Burn Situation?

The good news is that in our view Oversea Enterprise Berhad's cash burn situation gives shareholders real reason for optimism. Not only was its revenue growth quite good, but its cash burn relative to its market cap was a real positive. Even though we don't think it has a problem with its cash burn, the analysis we've done in this article does suggest that shareholders should give some careful thought to the potential cost of raising more money in the future. Separately, we looked at different risks affecting the company and spotted 2 warning signs for Oversea Enterprise Berhad (of which 1 is significant!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies, and this list of stocks growth stocks (according to analyst forecasts)