With the business potentially at an important milestone, we thought we'd take a closer look at Lithium Power International Limited's (ASX:LPI) future prospects. Lithium Power International Limited, a lithium company, engages in the identification, acquisition, exploration, and development of lithium assets in Chile and Australia. On 30 June 2022, the AU$203m market-cap company posted a loss of AU$13m for its most recent financial year. As path to profitability is the topic on Lithium Power International's 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.
Consensus from 2 of the Australian Metals and Mining analysts is that Lithium Power International is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$6.2m in 2025. The company is therefore projected to breakeven around 3 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 94% 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.
Underlying developments driving Lithium Power International's growth isn’t the focus of this broad overview, but, bear in mind that typically metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that Lithium Power International has no debt on its balance sheet, which is rare for a loss-making metals and mining company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on Lithium Power International, so if you are interested in understanding the company at a deeper level, take a look at Lithium Power International's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:
Historical Track Record: What has Lithium Power International'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 Lithium Power International'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.
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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.
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