In This Article:
With the business potentially at an important milestone, we thought we'd take a closer look at Genmin Limited's (ASX:GEN) future prospects. Genmin Limited, an exploration and development company, produces iron ores in Africa. The AU$51m market-cap company announced a latest loss of US$13m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which Genmin 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.
Check out our latest analysis for Genmin
Consensus from 2 of the Australian Metals and Mining analysts is that Genmin is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$36m in 2026. 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 98%, which is extremely buoyant. 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 Genmin's upcoming projects, but, take into account 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. Genmin currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Genmin's case is 71%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of Genmin to cover in one brief article, but the key fundamentals for the company can all be found in one place – Genmin's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:
-
Valuation: What is Genmin 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 Genmin is currently mispriced by the market.
-
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Genmin’s board and the CEO’s background.
-
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.