MC Mining Limited’s (ASX:MCM): MC Mining Limited, together with its subsidiaries, engages in the acquisition, exploration, development, and operation of metallurgical and thermal coal projects in South Africa. On 30 June 2019, the AU$66m market-cap posted a loss of -US$33.4m for its most recent financial year. The most pressing concern for investors is MCM’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for MCM, its year of breakeven and its implied growth rate.
See our latest analysis for MC Mining
According to the industry analysts covering MCM, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$2.3m in 2021. So, MCM is predicted to breakeven approximately a couple of months from now! What rate will MCM have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 113%, which is extremely buoyant. If this rate turns out to be too aggressive, MCM may become profitable much later than analysts predict.
ASX:MCM Past and Future Earnings, January 20th 2020
I’m not going to go through company-specific developments for MCM given that this is a high-level summary, but, keep in mind that by and large energy companies, depending on the stage of operation and resource produced, 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.
One thing I’d like to point out is that MCM has managed its capital prudently, with debt making up 14% of equity. This means that MCM has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on MCM, so if you are interested in understanding the company at a deeper level, take a look at MCM’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further research:
- Historical Track Record: What has MCM’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 MC Mining’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.
If you spot an error that warrants correction, please contact the editor at [email protected]. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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