Is KOP (Catalist:5I1) In A Good Position To Invest In Growth?

Even when a business is losing money, it’s possible for shareholders to make money if they buy a good business at the right price. 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. Having said that, unprofitable companies are risky because they could potentially burn through all their cash and become distressed.

So should KOP (Catalist:5I1) shareholders be worried about its cash burn? In this article, we define cash burn as its annual (negative) free cash flow, which is the amount of money a company spends each year to fund its growth. First, we’ll determine its cash runway by comparing its cash burn with its cash reserves.

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A company’s cash runway is calculated by dividing its cash hoard by its cash burn. As at September 2025, KOP had cash of S$10m and no debt. Looking at the last year, the company burnt through S$6.3m. Therefore, from September 2025 it had roughly 20 months of cash runway. 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. You can see how its cash balance has changed over time in the image below.

View our latest analysis for KOP

We’re hesitant to extrapolate on the recent trend to assess its cash burn, because KOP actually had positive free cash flow last year, so operating revenue growth is probably our best bet to measure, right now. The grim reality for shareholders is that operating revenue fell by 77% over the last twelve months, which is not what we want to see in a cash burning company. Of course, we’ve only taken a quick look at the stock’s growth metrics, here. You can take a look at how KOP has developed its business over time by checking this visualization of its revenue and earnings history.

Given its problematic fall in revenue, KOP shareholders should consider how the company could fund its growth, if it turns out it needs more cash. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. One of the main advantages held by publicly listed companies is that they can sell shares to investors to raise cash and fund 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).

KOP’s cash burn of S$6.3m is about 12% of its S$51m market capitalisation. 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.

Even though its falling revenue makes us a little nervous, we are compelled to mention that we thought KOP’s cash burn relative to its market cap was relatively promising. We don’t think its cash burn is particularly problematic, but after considering the range of factors in this article, we do think shareholders should be monitoring how it changes over time. On another note, KOP has 3 warning signs (and 2 which are significant) we think you should know about.

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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.