VHM Limited (ASX:VHM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. VHM Limited engages in the exploration and development of mineral properties in Australia. The company’s loss has recently broadened since it announced a AU$9.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$15m, moving it further away from breakeven. Many investors are wondering about the rate at which VHM 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.
View our latest analysis for VHM
Expectations from some of the Australian Metals and Mining analysts is that VHM is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of AU$54m in 2025. The company is therefore projected to breakeven around 2 years 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 123%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving VHM's growth isn’t the focus of this broad overview, however, bear in mind that by and large 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. VHM currently has no debt on its balance sheet, which is quite unusual for a cash-burning metals and mining company, which usually has a high level of 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 too many aspects of VHM to cover in one brief article, but the key fundamentals for the company can all be found in one place – VHM's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:
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Historical Track Record: What has VHM's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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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 VHM'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.
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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.