Yahoo Finance Chaarat Gold Holdings Limited (LON:CGH) Has Found A Path To Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at Chaarat Gold Holdings Limited's (LON:CGH) future prospects. Chaarat Gold Holdings Limited operates as a gold mining company. The UK£131m market-cap company’s loss lessened since it announced a US$22m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$7.6m, as it approaches breakeven. The most pressing concern for investors is Chaarat Gold Holdings' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Chaarat Gold Holdings
According to the 3 industry analysts covering Chaarat Gold Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$1.3m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 99% year-on-year, on average, 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 Chaarat Gold Holdings' upcoming projects, but, keep in mind that by and large a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we would like to bring into light with Chaarat Gold Holdings is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Chaarat Gold Holdings' case is 65%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Chaarat Gold Holdings, so if you are interested in understanding the company at a deeper level, take a look at Chaarat Gold Holdings' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
Valuation: What is Chaarat Gold Holdings 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 Chaarat Gold Holdings is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Chaarat Gold Holdings’s board and the CEO’s background.
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.
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.
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