Yahoo Finance Loss-Making Kibaran Resources Limited (ASX:KNL) Expected To Breakeven
Kibaran Resources Limited’s (ASX:KNL): Kibaran Resources Limited, together with its subsidiaries, engages in the exploration and evaluation of graphite and nickel properties in Tanzania and Australia. On 30 June 2018, the AU$37m market-cap posted a loss of -AU$3.8m for its most recent financial year. The most pressing concern for investors is KNL’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for KNL’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for Kibaran Resources
Expectation from Metals and Mining analysts is KNL is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of AU$17m in 2021. Therefore, KNL is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, I calculated the rate at which KNL must grow year-on-year. It turns out an average annual growth rate of 103% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, KNL may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for KNL given that this is a high-level summary, however, keep in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. KNL currently has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which usually has a high level of debt relative to its equity. This means that KNL has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of KNL which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at KNL, take a look at KNL’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should look at:
Historical Track Record: What has KNL’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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Kibaran Resources’s board and the CEO’s back ground.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
