Chaarat Gold Holdings Limited's (LON:CGH) Profit Outlook

Chaarat Gold Holdings Limited (LON:CGH) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Chaarat Gold Holdings Limited operates as a gold mining company. The UK£140m market-cap company posted a loss in its most recent financial year of US$29m and a latest trailing-twelve-month loss of US$31m leading to an even wider gap between loss and breakeven. 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?” 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 Chaarat Gold Holdings

Consensus from 2 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 2022, before generating positive profits of US$43m in 2023. So, the company is predicted to breakeven approximately 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 75% year-on-year, on average, 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, however, 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

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 around investing in the loss-making company.

Next Steps:

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 pertinent factors you should further examine:

1. 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.
2. 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.
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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