When Can We Expect A Profit From Kalium Lakes Limited (ASX:KLL)?

With the business potentially at an important milestone, we thought we'd take a closer look at Kalium Lakes Limited's (ASX:KLL) future prospects. Kalium Lakes Limited operates as an exploration and development company in Western Australia. The AU$176m market-cap company announced a latest loss of AU$19m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Kalium Lakes' 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.

View our latest analysis for Kalium Lakes

Kalium Lakes is bordering on breakeven, according to the 2 Australian Chemicals analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$4.6m in 2022. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 97% year-on-year, on average, which signals high confidence from analysts. 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, we won’t go into details of Kalium Lakes' upcoming projects, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 37% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Kalium Lakes which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Kalium Lakes, take a look at Kalium Lakes' company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is Kalium Lakes 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 Kalium Lakes is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kalium Lakes’s board and the CEO’s background.
3. 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. 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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