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We feel now is a pretty good time to analyse Hastings Technology Metals Limited's (ASX:HAS) business as it appears the company may be on the cusp of a considerable accomplishment. Hastings Technology Metals Limited, together with its subsidiaries, engages in the exploration and development of rare earth deposits in Australia. The AU$48m market-cap company announced a latest loss of AU$34m on 30 June 2024 for its most recent financial year result. As path to profitability is the topic on Hastings Technology Metals' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Hastings Technology Metals
Consensus from 2 of the Australian Metals and Mining analysts is that Hastings Technology Metals is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$34m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 13% year-on-year, on average, which is relatively reasonable. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Hastings Technology Metals given that this is a high-level summary, but, keep 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. So, a double-digit growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Hastings Technology Metals is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Hastings Technology Metals' case is 57%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
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There are key fundamentals of Hastings Technology Metals 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 Hastings Technology Metals, take a look at Hastings Technology Metals' company page on Simply Wall St. We've also put together a list of important aspects you should look at: