Strong coal prices and higher production volumes have delivered a strong 1Q17 net profit from continuing operations of US$14.6m (1Q16: US$2.9m loss) for coal miner Geo Energy Resources.
|
US$’m |
1QFY17 |
1QFY16 |
Change |
|
Revenue |
99.3 |
11.9 |
735% |
|
Gross profit |
25.3 |
0.3 |
nm |
|
Profit from continuing ops |
14.6 |
(2.9) |
|
Its 1Q2017 revenue surged more than 700% year-on-year to US$99.3m on higher coal sales volume (+456%) as well as coal ASPs (+161%).
Coal sales of 2.2 million tonnes from its coal mine in South Kalimantan, PT Sungei Danau Jaya, accounted for 88% of revenue and over 98% of gross profit.
Cash profit per tonne was US$ 13.52, which was stable compared to 4Q2016 and a stark increase from 1Q2016’s US$ 3.02 profit per tonne.
This is despite 1Q being the wet season, when production is typically lower.
 “Geo Energy continues to execute on its turnaround and its journey towards becoming one of Indonesia’s top 10 coal producers. From net losses of US$ 2.6 million just one year ago in 1Q2016, we have turned around and reported a net profit of US$ 14.6 million in 1Q2017. "Importantly, ICI 4200 GAR coal prices to date are still continuing to show promising signs of a sustained recovery in 2017 as compared to a year ago. "We are currently in the process of acquiring PJA, a mining concession in East Kalimantan, and TBR, which is a mining concession strategically located next to the Group’s SDJ coal mine. Once completed, these acquisitions will almost double our coal reserves to more than 90 million tonnes." -- Tung Kum Hon, CEO, Geo Energy Resources (Photo by Sharon Woo) |
Geo Energy also saw contributions from coal trading and coal mining management services in this quarter, with the latter recording gross margins of 43.4% compared to the 28.6% of the coal mining segment in 1Q2017.
The company has previously announced a production target of 10 million tonnes in 2017, and it remains on track to deliver against this target. The production target is supported by an 8 million tonne off-take agreement with Engelhart Commodities Trading Partners, for which Geo Energy received a US$ 40 million prepayment in December 2016.
|
Stock price |
31 c |
|
52-week range |
9.0 – 35.5 cts |
|
PE (ttm) |
6.7 |
|
Market cap |
S$388 m |
|
Shares outstanding |
1.2 b |
|
Dividend yield |
3.1 |
|
Year-to-date return |
37.8% |
|
Source: Bloomberg |
|
As Geo Energy returns to profitability amid a sustained coal price recovery, its balance sheet has also materially strengthened.
As at 31 March 2017, Geo Energy’s net debt to equity was just 11.4%, including the 7% medium-term note due in January 2018, and it continues to explore ways to optimise its capital structure.
As a show of strength, the company proposed its first ever dividend since listing on the back of a record 4Q2016 net profit, its highest since listing.
The proposed dividend was approved by shareholders at the recent Annual General Meeting, and is to be paid on 30 May 2017.
At the last close of 32 cents a share on 11 May 2017, this represents a yield of 3.1%.
For more information, please see press release here.
SGX-listed peers Golden Energy, BlackGold Natural Resources and Resources Prima Group have yet to report earnings as of 11 May.
Comments
I believe the off take agreement is for 7mil tonnes, not 8 mil.