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Anyone know what’s driving this move, what a lift since last month
Yep I remember seeing comments similar to this back in the early days of TGA after it was spun out - equity more or less equalled the cash in the bank.
2023 year end cash esitimated a 9.6 billion Rand. (see RNS mid Dec 23) that's 393-394 Million UK pounds. EPS est 31 to 36 Rand ...about £1.35 (see RNS Jan 24).
So with TGA valued at £585.23 Million at current share price, 67%+ of that is currently sitting in a cash deposit. Leaving the non cash assets of TGA valued at only £76 million.
Interesting analysis. Some comments/questions so that I can tweak my own modest financial model.
1. Domestic sales - seemingly 3.826million tonnes in H1 2023. What approximate sales price and operating costs?
2. Finance income - ZAR545m in H1 2023. Recurring? Not a small number.
3. Cashflow H2 2023 - assume TGA paid for Ensham (ZAR4.1b?) and dividends (ZAR1.4b). Capex presumably higher in H2 2023 (maybe ZAR2.2b).
4. Thoughts on DEC 31 net cash number? For reasons stated above, presumably significantly lower than JUN 30.
Possibly time to revisit this old favourite.
Https://uk.finance.yahoo.com/news/miners-set-bumpy-ride-060000383.html
I think those are high quality thoughts.
The only things I would add are that RB volumes have recently been significantly improved (60mt annualised in December), and the unwinding of excess stock in China will come to an end.
What can we expect for 2024 ?
Based on the RNS update TGA gave 13/12 23, here's some rough estimates based on current low prices.
South Africa operation: FOB Richards Bay costs 1170 to 1250 Rand / ton inc royalties. Let's say average of $63. Recent RB prices $93 / ton LESS discount. Discount was 15% in 2023, narrowing as prices fall. Let's say 13% discount- prices obatined $80.91 / ton, TGA profits $18 ton. Times 12 million tons. There's $216 million profit there.
Ensham: FOB costs 1947 Rand/ton = $101.56 / ton costs. Recent Newcastle prices, say $129. PLUS premium to benchmark 10% (see RNS) ... TGA gets $141 ton. About $39 / ton profit. Estimated annual sales 3 millon tons (see RNS). There's $117 million profit here.
Total profits for 2024 based on current low coal prices $ 333 million. Any thoughts ?
And +7.1% in total since Thursday.
6Feb-22Feb was between 90-93
Friday jumped to 95.55, and Monday to 98.75.
I don't claim to know what's driving this, I just keep an eye on the market. This stock is really a leveraged bet on coal prices, like it or not. My personal view is that coal is more likely to settle in a 100-150 medium term trading range rather than 60-90, so I like TGA at these levels, but with that view I see TGA around 6.50-9.50 being a fair target, I am not expecting a move to 18 (or even 10+) although of course I wouldn't be unhappy. I am a medium term holder, but trade it a bit, have been watching and waiting to buy and after the Friday move in coal I finally pulled the trigger yesterday at 4.21.
Richard Bay coal +3.35%
Yeh as you point out it’s a play on where you think coal will go. I similarly have done well out of this having been in since the start in 2021 when any equity coal related was marked as worthless.
I’m punting on the medium to long term view here like some others are of there not being enough new new coal supplies coming online to replace existing closing mines before the world is able to transition from coal fired power.
GLA
Thungela Resources warned on it expects annual earnings to plunge as a result of once-off adjustments, lower production and weaker prices. The Rosebank-based coal miner said earnings per share is likely to slump to a range of between R 34 and R 39 in 2023, from R 127.08 in 2022. Over this period, the company estimates a headline EPS between R 31 and R 36 down sharply from R 130.82
Cant find any hedge for south african, Australian was in the takeover document.
Think the cash is worth the share price plus Australian hedges worth having.
Yes, but all those are factored into the R4.6bn to R5.4bn profit guidance.
Look at it another way. A profit of $260m off 12m tons of coal is about $20 a ton.
$127 was the H1 average for RB, certainly not the full year.
I suspect the markets will wail and gnash until the 2022 figures cease to be the yardstick. The buying opportunity will be around for a while yet, and that's welcome.
PS The last I read was that RB volumes in December were much 60m tons annualised.
Same again sounds a bit optimistic to me. I mean, I hope you're right but with the one-off costs in Aus, reduction in the amount shipped in SA & falling coal prices I'd be surprised if it's more than half the interim. I'd be happy with that under the circumstances. Fingers crossed for a better 2024.
This has been my most profitable listed stock investment ever, but I'm currently not holding any.
At first glance this looks cheap. MC of $775m, net cash (June 30th) of $705m & EV of around $70m. 2023 earnings should be around $256m (middle of range announced today), implying a current PE of around 3x and a tiny EV:EBITDA.
Everyone is getting excited about the final dividend. Interim dividend was $0.52 per share (£0.41) before the South African withholding tax folks took their hefty slice. A similar final dividend and we're looking at a gross dividend yield of just under 20%. What's not to like?
The flaw in the logic is that we're looking back in time to the heady days of, err, 2023. The company calculates an average coal price of around $123 per tonne. The trouble is, Richard Bay thermal coal is now $92 per tonne. Get your Mystic Meg crystal balls ready to determine coal prices in 2024 and beyond.
What are the economics of the South African operations at $92 per tonne? Are they still profitable? And what are the economics of the 'new' Australian operations? We need to see segmental information when the accounts come out on March 18th (and then look at 2024 coal prices Down Under and run our spreadsheets). Is the dividend sustainable? How has the cash position changed since June 30th? And what's the latest with the South African railway system?
There are a lot of variables here and I'm not in the mood to catch this falling knife just yet. It all boils down to one's view/guess about coal prices going forward.
After the 20% WHT the October divi was about 33p. Same again would mean a 15% yield at SP of 431p.
Despite this being a fairly simple business to describe ie. Dig it, move it, sell it, there are a surprising number of hidden variables across the two areas (continents) of operation.
atb
That would be great
H1 was R10. Best guess? Same again.
R20, so circa 80pps.
Hi, in your opinion what do you think annual dividend could be..Thank you
Oh, the disappointment of only making £200m...
The stand out thing is that they were still very decently profitable in H2.
The Australian coal was hedged at a much higher price so the current poor price of coal isn't applicable for australian coal what I don't know is the south african coal hedged???
Anyone know.
Coal at $100 per ton and SA operations make no profit ; coal at $200 per ton and annual net profit is above current market cap ! That's the basic economics here. Australia operations are probably marginally better at low prices, so a good diversification by the BoD assuming they're in it for the long term.
Has the market fully priced in continual RB coal at $90 ? Certainly not, the sp would be back at £2 if they had.
But a return to just around $130 and this starts to look like a low single digit p/e. So the question that really needs to be answered is will energy demand in Africa and Asia exceed the supply capabilities of "green" sources over the next few years.
I think it will, so I'll keep holding even though we're down 50% in the past 12months
They could be topping up to over 5 percent for the long term but either way this is positive 👍
The biggest question mark here is the low thermal coal price environment (92.50 now). TGA was 'sale of the century' when the share price was £1.50 and coal prices were 4x the current rates. We all filled our boots and made small fortunes. But now this stock is a definite 'watch'.
What is the economics of the South African operations at low prices? Ditto the newly-acquired Australian operations. And do these economics allow any kind of ongoing dividends? A 10% dividend yield in perpetuity would be great but this isn't guaranteed. I would argue that a double digit dividend yield is necessary to justify holding this stock.
We need to see and review a set of recent financial statements to answer some of these questions. There are also lingering concerns over South African logistics i.e. moving the coal using the crumbling, unreliable, strike-ridden South African rail system. Infrastructure risk gives TGA the occasional kick in the teeth.
I have a good feeling about the company's management team. They are open and they are pursuing diversification (but don't buy on the fluff around Dubai). However, management can't control the Richard Bay thermal coal price. I'm completely out of this stock but look forward to the day when I return.
Oh how good this stock was (still is).
I can't work out how low this may go but at the current market conditions I would say further drops before the bottom is reached.
Until the turn around - enjoy the SA commercialss
https://www.youtube.com/watch?v=zKGs8ZJyHrg