Yahoo Finance When Will Chaarat Gold Holdings Limited (LON:CGH) Breakeven?
Chaarat Gold Holdings Limited's (LON:CGH): Chaarat Gold Holdings Limited owns, operates, and explores for gold deposits. With the latest financial year loss of -US$17.0m and a trailing-twelve month of -US$24.3m, the UK£166m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which CGH will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for CGH’s growth and when analysts expect the company to become profitable.
View our latest analysis for Chaarat Gold Holdings
Consensus from the 3 Metals and Mining analysts is CGH is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$9.3m in 2021. Therefore, CGH is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which CGH must grow year-on-year. It turns out an average annual growth rate of 70% is expected, which is extremely buoyant. 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, I won’t go into details of CGH’s upcoming projects, but, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, 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.
One thing I would like to bring into light with CGH is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and CGH has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of CGH 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 CGH, take a look at CGH’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further research:
Historical Track Record: What has CGH'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 Chaarat Gold Holdings’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.
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