Bowen Coking Coal Limited (ASX:BCB) On The Verge Of Breaking Even

Bowen Coking Coal Limited (ASX:BCB) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Bowen Coking Coal Limited, together with its subsidiaries, engages in the exploration, development, and production of metallurgical coal in Australia. The company’s loss has recently broadened since it announced a AU$163m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$167m, moving it further away from 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?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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 2023, before turning a profit of AU$189m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 110% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Bowen Coking Coal given that this is a high-level summary, but, bear in mind that generally 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.

One thing we would like to bring into light with Bowen Coking Coal 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. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Bowen Coking Coal to cover in one brief article, but the key fundamentals for the company can all be found in one place – Bowen Coking Coal's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. 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.

2. 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.

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. 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.