Chaarat Gold Holdings Limited (LON:CGH) Could Be Less Than A Year Away From Profitability
We feel now is a pretty good time to analyse Chaarat Gold Holdings Limited's (LON:CGH) business as it appears the company may be on the cusp of a considerable accomplishment. Chaarat Gold Holdings Limited operates as a gold mining company. The UK£111m market-cap company announced a latest loss of US$3.6m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on Chaarat Gold Holdings' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Chaarat Gold Holdings
Consensus from 3 of the British Metals and Mining analysts is that Chaarat Gold Holdings is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$2.4m in 2022. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 72% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Chaarat Gold Holdings' growth isn’t the focus of this broad overview, though, take into account that by and large 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.
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 61%. 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 put together a list of essential 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.
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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.
