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1Q18 was a record quarter for coal producer Golden Energy & Resources (GEAR).
Profit attributable to GEAR shareholders jumped 40.7% to US$26.8 million.
"We expect coal prices to soften but we will mitigate this by ramping up production," said Mark Zhou, GEAR's head of investments at a 1Q results briefing. "We are looking at ASPs to be US$38-42 per tonne." |
This table looks at the trend for some key metrics:
|
Year |
2016 |
2017 |
2018F |
1Q18 |
|
Net profit attributable |
US$21.8 m |
US$63.0 m |
? |
US$26.8 m |
|
Coal production |
9.5 m |
15.6 m |
>20 m |
4.7 m |
|
Weighted average |
US$33.8 |
US$42.3 |
? |
US$47.35 |
|
Cash cost |
US$19.5 |
US$23.1 |
forecast: |
US25.56 |
Mark Zhou, head of investments at GEAR.
NextInsight file photoBack to 1Q18 financial performance: It was mainly bolstered by the continued strong showing of its coal business, which benefitted from higher sales volumes and higher average selling prices.
The average selling price for the coal mining division increased from US$40.86 in 1Q 2017 to US$47.35 per metric ton in 1Q 2018.
This translates into an average cash profit of US$21.79 per metric ton, which would have been higher if not for an rise in the cash cost of mining due to a higher strip ratio and higher fuel cost.
Revenue from the coal mining division nearly doubled to US$237.3 million in 1Q2018.
Revenue generated by the coal trading division increased from US$12.6 million to US$35.3 million in the same periods under review.
|
US$’m |
1Q18 |
1Q17 |
Change |
|
Revenue |
273.0 |
143.2 |
90.7 % |
|
Gross Profit |
115.9 |
72.1 |
60.7 % |
|
Net Profit |
43.5 |
29.6 |
47.1 |
|
Profit attributable |
26.8 |
19.0 |
40.7 % |
|
Earnings per share |
1.14 |
0.81 |
40.7 |
In 1Q2018, GEAR produced 4.7 million tonnes of coal, and is on track to achieving over 20 tonnes for the year, or a 28% y-o-y increase supported by an ongoing expansion of PT Borneo Indobara’s processing capacity.
As of 31 March 2018, the Group’s balance sheet remains robust with cash and cash equivalents of US$304.8 million and a low gearing ratio of 0.16 times.
In February 2018, GEAR had raised US$150 million by issuing its maiden bonds.
Part of these proceeds are to be used for general corporate purposes including potential acquisitions. 
Fuganto Widjaja, Group CEO of GEAR.Mr. Fuganto Widjaja, Executive Director and Group CEO of GEAR, said, “GEAR has consistently achieved excellent financial results since the resumption of trading in our Group’s shares in December 2016.
"The growth momentum of our topline is a clear reflection of the success of our production ramp-up and the operational efficiency of our coal mining operations, which enabled us to benefit from the current coal price environment."
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Outlook
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For the Powerpoint materials, click here.
