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. On 31 December 2020, the UK£166m market-cap company posted a loss of US$22m for its most recent financial year. Many investors are wondering about the rate at which Chaarat Gold Holdings will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 4 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 2020, before generating positive profits of US$6.0m in 2021. Therefore, the company is expected to breakeven roughly 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 70% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Chaarat Gold Holdings’ growth isn’t the focus of this broad overview, but, keep in mind that typically 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 debt-to-equity ratio of over 2x. Typically, 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.
There are too many aspects of Chaarat Gold Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Chaarat Gold Holdings’ company page on Simply Wall St. We’ve also put together a list of essential aspects you should further research:
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. 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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