Global coal prices have surged since June 2016, and miners have turned profitable. 2017 will see massive profits returning, if coal prices stay where they are. Photo: Company The Edge Singapore, in its current Feb 20-26 weekly edition, has added Golden Energy & Resources (GEAR) to its Singapore market portfolio (see table).
|
Company |
Share |
Recent share price |
|
AP Oil |
$0.23 |
0.255 |
|
CapitaLand |
$3.06 |
3.460 |
|
Chew’s Group |
$0.325 |
$0.365 |
|
Cogent Holdings |
$0.695 |
$0.780 |
|
Fischer Tech |
$1.45 |
$1.780 |
|
Golden Energy & Resources |
$0.515 |
$0.515 |
|
Japfa |
$1.04 |
$1.010 |
|
Old Chang Kee |
$0.81 |
$0.860 |
|
Venture Corp |
$10.12 |
$10.240 |
"We think it will benefit from higher coal prices. GEAR is planning to ramp up its coal production by 40% to hit 14 million tonnes this year," according to the article.
GEAR has a break-even cost of production of US$21 a tonne.
Assuming it can sell its coal at US$40+ per tonne, it would reap a gross profit of roughly US$280 million if it produces its target of 14 million tonnes of coal this year.
KGI Securities' forecast: US$95.8 million in net profit this year.
On that number, GEAR's price-earnings ratio is less than 10, considering its market cap of about S$1.25 billion based on a stock price of 53 cents.
| Golden Energy & Resources | |
| Share price: 53 c |
Target price: 95 c (Source: KGI) |
For The Edge's write-up on its portfolio matters, go buy a copy at newsstands for S$5.
See also: GOLDEN ENERGY & RESOURCES: 3 things to focus on
