Breakeven On The Horizon For Chaarat Gold Holdings Limited (LON:CGH)
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£45m market-cap company announced a latest loss of US$8.6m on 31 December 2022 for its most recent financial year result. The most pressing concern for investors is Chaarat Gold Holdings' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Chaarat Gold Holdings
Expectations from some of the British Metals and Mining analysts is that Chaarat Gold Holdings is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$10m in 2024. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 62%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Chaarat Gold Holdings' upcoming projects, but, take into account that generally metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. Chaarat Gold Holdings currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Chaarat Gold Holdings' case is 65%. Note that a higher debt obligation 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:
Historical Track Record: What has Chaarat Gold Holdings' 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' 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.
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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.
