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I should add that I understand why individuals are irritated, and you have the right to reply and stand up for yourself. It’s just that we have mutual foes e.g. falling share prices and people like the south coast skinny dipper (grab a magnifying glass to determine its sex. Oops, I’ve focussed the sun on it and it’s smoking. There’s less of it left now and there was so little to start with. Oh well, never mind).
It’d be good to concentrate on our mutual foes rather than on each other. But I know what it’s like when things kick off so I appreciate the feelings on both sides.
As an outsider, can we call a ceasefire please? It’s just been so lovely on here since a certain south coast bather was pulled out to sea by a TGA riptide so we haven’t had to endure his daily drivel, squirted out as often as diarrhoea from a dck with dysentery. The post count has fallen and the share price has risen - it’s like it used to be.
Maybe call a ceasefire and only react if the other side throws in a hand grenade. Hopefully neither will.
LOL - DK really hasn’t a clue.
Like a goldfish - you can tell him something and 3 seconds later he’s forgotten it.
Like “When’s the divi announcement?” “Read the RNS - on the 21st.” then 2 minutes later “When’s the divi announcement?” . . . an utter fool . . .
Just ignore him - it’s like dealing with a 3 year old.
Dark_Knight2020, what happened to "Regret not selling last week at 600p"
I am really hoping this holds now above 620p and stays above that price point. Hopefully coal will move a bit higher. I can't believe summer is almost over. In one month and one week it will be Oct !
You mean $124.15… great uplift in prices again!
Sept 23 coal is $121/t
https://www.barchart.com/futures/quotes/LVu23/futures-prices?page=1&orderBy=contractSymbol&orderDir=desc
That escalated quickly...
Ricards Bay Coal price at 112.
https://www.investing.com/commodities/coal-(api4)-fob-richards-bay-futures
Also...
https://www.coaljunction.in/news/n_newsdetail/thungela-pushes-ahead-with-acquisition-plans-/34392
Thungela Resources (TGAJ.J), South Africa's largest shipper of coal burned in power stations, said it would push ahead with plans to acquire new assets even as lower prices and challenges moving the fossil fuel to local ports squeeze profits.
The Johannesburg-based miner's plans to diversify geographically have not changed despite coal prices falling from record highs, CEO July Ndlovu said.
"We are going to continue to look for assets and we have always said we wanted to grow our business,,"
The CEO said Thungela has a strong cash position to pay dividends and acquire new assets even as coal prices soften.
Thungela had 13.6 billion rand in net cash at end-June versus 14.8 billion rand a year earlier and has modelled its business on prices around $90 per ton of coal.
Thungela and producers including Exxaro Resources (EXXJ.J) and Kumba Iron Ore (KIOJ.J) are stockpiling coal and iron ore at their mines as state-owned rail operator Transnet SOC struggles to move output to the country's ports.
Thungela forecast output this year at between 11.5 million and 12.5 million tons from 13.1 million tons last year and against an annual potential production capacity of about 16 million tons of coal. Ndlovu declined to give production guidance for 2024.
What a change from 3.4% down to 7.6% up today
;0 )
Newcastle price over $150 now so Ensham is spitting off cash at $100 cost
Rb month ahead into $120s now so great cash coming in there too
Onwards and upwards for this very cheap stock
What a change from 6% down to 5% up today.
The results and dividend are broadly in line with what I was anticipating, still good even though you can’t help but compare against the FY22 anomaly.
I mostly agree with the points in Edward’s post. This is very much a marmite stock which will have the last rites read over it prematurely many times before it eventually does become unviable to mine coal.
September pricing up Almost 2% again today to $121.65 :)
Yes, Deon Smith confirmed earlier this year that the breakeven base price is $90.
And yes, the share price will ultimately follow profit, and in turn, the coal price.
As I see it, this boils down to which falls faster - global demand, or global supply.
My view is that future demand is grossly underestimated, and global supply will fall first and fastest as few are willing to risk the negative woke press associated with opening new coal mines.
It's a contrarian play, backed by cold hard facts rather than the fantasies of a virtue-seeking cult.
I invest monthly, so the longer this stays cheap, the more boyntiful the dividend I can buy.
I fully accept I might be wrong, and India and China might embrace mung bean generated power next week.
After the inital fall I thought we might be stuck under 540 for a few days but nice finish up. I hope this continues throughout this week.
They make a lot more money in terms of margin with Ensham so that will be another reason why the market is moving the shares higher today. They would be selling their coal at around the Newcastle price of $150 which costs them around $100. Very healthy margins. Seems like a few were thinking that wasn’t going to complete (as per Morgan Stanley) but it’s happening end of this month so something to look forward to. Nice to see Richards bay up again and this closing at day highs. Great demand and strength today, hopefully no one on this forum got flushed out
Edward
I agree that there are many other single product businesses - and, no matter how well those businesses may be run, if the price of their product craters then they suffer. Equally, if their product soars they benefit - as has been the case across the energy sector including Thungela. My comment stands, Thungela's profitability depends on the price of their single product.
JA - If the average RB price on an ongoing basis were to be $95 then (all other things such as production levels, costs, discount level being in line with H1) then IMO Thungela would not be profitable. As their results show, an average RB coal price of $130 resulted in a profit of Rand 3billion or $28 per ton. Therefore if the RB coal price were to be (let me emphasise) on an ongoing basis some $35 per ton lower I cannot see how they could be profitable. They would however, as referred to in their report, undoubtedly adjust their business/production levels as necessary.
Conversely, if the RB coal price were to be say $180 per ton (some $50 per ton higher than H1) their profits would more than double.
The risk/reward as things stand don't stack up for me - others regard it as a bargain opportunity. To each their own.
Granted this it very true however if the coming winter is a cold one, the coal price will go through the roof.
Should SA stabilise and become a more bankable country then we're likely to see a lot of upside. Regardless, both of these points provide a short to long term upside from the current SP.
Hopefully retest of 700p shortly!
A couple of observations on your post.
Great emphasis was put on the time lag of the discount, and that the H1 discount was based on H2 22 prices. The discount (an absolute figure) will fall in H2.
Second - very few companies are not, in reality, single product entities. Airlines, hotels, oil companies, banks - they all basically also do one thing.
Jjh - but let’s capture the Low price of say $93 coal. If we then deduct the 18% we are saying loss making right?
Hi Bangrak, I rekcon you are very accurate and completley agree with your analysis and calculations.
Bangrak....You are correct....£20 million added in one month,with a likely increase in coal prices imminent....together with cash reserves ,definitely points too a rerate imminent.....
Just a bit of simplified numerical backup for JA’s post of 9.36am
In H1 the RB Index price was approx. $130 (with Thungela receiving 82% of the figure – lower than previous percentages).
On that price and with approx. 6milion tons of production/sales the Net Profit was Rand 3billion. To express that as a profit per ton in dollars :-
Rand 3billion = $167million = Approx $28 per ton
We are now in the 8th week of this 26 week reporting period and the RB index price thus far has averaged less than $110 – i.e. $20 per ton lower than the H1 index price. Taking into account the 82% pricing this indicates a net profit of not much more than $10 per ton.
As for my own take on things……
Simply put, Thungela IMO is a well-run business operating in a basket case of a country – as exemplified particularly by the shambles that is Transnet. It has very prudently built up cash reserves on its balance sheet when coal prices were high (whilst at the same time making generous dividend and Community distributions) and is in a very strong financial position going forward.
However, it has a single commodity and – as regards future profitability and distributions – it is basically a leveraged play on the coal price – i.e. Its profits will go up in percentage terms by much more than the percentage increase in the coal price… or go down by much more than the percentage decline in the coal price as has been seen through H1.
If the RB coal price rises above say $150 per ton (or possibly much higher) then the dividends will rise accordingly above the H1 level. At this stage, for the current half year the dividend outlook is potentially below the H1 level.
Personally, for me the risk/reward ratio doesn’t work at (or near) the current SP….. but those who are more aligned to a bullish coal price scenario kicking into action very shortly will disagree (as they are fully entitled to).
All I know this am is investec in SA said sell tp 125 rand...