Geo Energy kept at 'buy' on expanding war chest

Geo Energy kept at 'buy' on expanding war chest

Stanislaus Jude Chan
28/11/17, 01:13 pm

SINGAPORE (Nov 28): Phillip Securities Research is keeping its positive stance on coal producer Geo Energy Resources on the back of an improving war chest amid robust production.

The brokerage is keeping its “buy” call on Geo Energy with an unchanged target price of 44 cents.

The group in early October issued a new senior note with aggregate principal amount of US$300 million ($404 million). The proceeds were used to partially redeem the $100 million medium term notes due in Jan 2018, as well as repay advances from Engelhart Commodities Trading Partners (Singapore).

“Issuance of the new note enhanced solvency and liquidity,” says Phillip analyst Chen Guangzhi in a Tuesday report.

“The balance of roughly US$200 million, together with the cash on hand of US$36 million as of Sept 2017, will fund working capital or to fund potential acquisitions of coal mining assets,” he adds.

Geo Energy saw its earnings climb 16% to US$8.6 million in the 3Q ended September, from US$7.4 million a year ago, while revenue jumped 32% to US$74.9 million.

According to Chen, the “stunning performance” was driven by soaring coal price and production volume.

See: Geo Energy Resources posts 16% increase in 3Q earnings to $11.7 mil on higher revenue

However, the coal miner is not expected to hit its sales target of 10 million tonnes of coal, which was set at the start of the year, due to a prolonged monsoon season in the second and third quarters.

Looking ahead, Geo Energy has raised its production target in FY18 to 12-15 million tonnes. This will include production from the expected commencement of operations at its recently acquired PT Tanah Bumbu Resources (TBR) mine in 1Q18.

“As of now, the group is offered three proposals of offtake agreements for TBR mine, and the prepayment price of which will be at least US$4 per tonne, comparable to the offer for SDJ mine in FY16,” says Chen.

“If it pans out, the new offtake will provide more visibility to production volume and further improve the cash position,” he says.

As at 1.09pm, shares of Geo Energy are trading half a cent higher at 26 cents, implying an estimated price-to-earnings ratio of 4.3% in FY18.

Few have made it where Tung Lok now treads: SAC

SINGAPORE (Oct 17): Since its founding in 1984, Tung Lok Restaurants (2000) has made a name for itself in the local F&B scene. From serving gourmet Chinese cuisine in its flagship Tung Lok Restaurant, it is now engaging the tastebuds of a younger generation and licensing its brands overseas. As at end March, Tung Lok operates as 43 F&B outlets with 24 directly owned, eight held by associates and 11 others under management. These are located in Indonesia, Japan, China, Vietnam and, of course, Singapore. The group’s operations can be segmented into three categories: restaurateur,....

Analysts put SPH on 'hold', but is the end of its earnings decline in sight?

SINGAPORE (Oct 17): Analysts across three brokerages – UOB Kay Hian, OCBC Investment Research, and CGS-CIMB Research – have “hold” recommendations on Singapore Press Holdings (SPH), as the group performed below expectations for FY18. SPH saw its full-year earnings fall 19.7% to $281.1 million for the FY18 ended August, from $350.1 million a year ago. However, this was mainly attributable to the absence of a one-off gain of $149.7 million a year ago from the divestment of a joint venture. FY18 operating revenue fell by 4.8% to $982.6 million, from $1.03 billion a year ago. See:....

Continued overseas expansion to fuel a stronger 2H for MindChamps: RHB

SINGAPORE (Oct 17): RHB Research is maintaining its “buy” call on MindChamps Preschool with an unchanged target price of 94 cents based on a blended valuation methodology comprising a target EV/EBITDA of 18 times, in line with the peer average, and DCF. In a Tuesday report, analyst Juliana Cai reiterates her positive expectations of the company’s impending release of its 2H results, as she expects higher earnings on stronger student enrolment, contributions from the Australia preschools, and one-off gains from the sale of franchise licenses. With MindChamp’s acquisition of six ce....
Stars align for US banks to shine

(Oct 15): A decade after the global financial crisis, the landscape of the US financial services ind