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With the business potentially at an important milestone, we thought we'd take a closer look at Bowen Coking Coal Limited's (ASX:BCB) future prospects. Bowen Coking Coal Limited engages in the exploration and development of coal project with primary focus on metallurgical coal. The AU$440m market-cap company posted a loss in its most recent financial year of AU$3.2m and a latest trailing-twelve-month loss of AU$7.0m leading to an even wider gap between loss and breakeven. 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?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Bowen Coking Coal
Expectations from some of the Australian Metals and Mining analysts is that Bowen Coking Coal is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$175m in 2023. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 17%, which is relatively reasonable. 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 Bowen Coking Coal's upcoming projects, but, bear in mind that typically a metal and mining business has lumpy cash flows which are contingent on the natural resource mined and stage at which the company is operating. This means a double-digit growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Bowen Coking Coal has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of Bowen Coking Coal 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 Bowen Coking Coal, take a look at Bowen Coking Coal's company page on Simply Wall St. We've also put together a list of key aspects you should further research:
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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.
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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.
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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.