UT, before you jump into Sakari, you may wish to read a good summary by CIMB on what is happening in the business:
1. Coal miners had to contend with falling coal prices. Thermal coal prices have slumped by 22% YTD due to excess supply from non-traditional sources such as the US, the result of substitution by cheap shale gas.
US utilities, laden with take-or-pay contracts with miners, have been compelled to dump unwanted coal on Asia, forcing prices down.
2. Falling coal prices have dampened the ASPs and earnings of coal producers. Stock prices have been duly punished.
Sakari Resourcesâ1Q12 net profit fell 65% yoy as it gave priority to the opening of new pits over coal extraction amid lacklustre coal prices.
U may have noticed that Sakari is trading at 1.875 / 1.880 though the offer price by PTT is $1.90. However, the devil is always in the details.
The offer price of $1.90 includes the right for PTT to receive and retain the interim dividend of US0.02 cents. This means if u buy now at 1.880, you would be worse off as the offer price still has to deduct the interim dividend of US0.02 cents.
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