We Might See A Profit From Bowen Coking Coal Limited (ASX:BCB) Soon
We feel now is a pretty good time to analyse Bowen Coking Coal Limited's (ASX:BCB) business as it appears the company may be on the cusp of a considerable accomplishment. Bowen Coking Coal Limited, together with its subsidiaries, engages in the exploration, development, and production of metallurgical coal in Australia. On 30 June 2023, the AU$291m market-cap company posted a loss of AU$163m for its most recent financial year. Many investors are wondering about the rate at which Bowen Coking Coal will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Bowen Coking Coal
Consensus from 2 of the Australian Metals and Mining analysts is that Bowen Coking Coal is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$53m in 2024. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 48%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Bowen Coking Coal's growth isn’t the focus of this broad overview, though, keep in mind that generally 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 we would like to bring into light with Bowen Coking Coal is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 Bowen Coking Coal, so if you are interested in understanding the company at a deeper level, take a look at Bowen Coking Coal's company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is Bowen Coking Coal 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 Bowen Coking Coal 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 Bowen Coking Coal’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.
