Member Info for EdwardSeaton

Guys - please don't go back there.

Https://www.reuters.com/markets/commodities/asias-coal-sector-sees-long-prosperous-life-despite-energy-transition-russell-2023-09-27/?mc_cid=f978f8ff07&mc_eid=8f325738a0

Can we all take note of the failure of the fabled correlation between the share price of mining stocks and the price of gas.

How many thousands of comments can be written about absolutely nothing?

Given that there is someone on the other side of every transaction, that cannot possibly make sense.

I'll give you one guess.

StraightAIM - I'm certainly not saying the UK property business is bad - I'm just saying that the market will always see it as a bizarre irrelevance to what is a coal mining business. It's just as if Oxford Nanopore were to buy half a dozen small country house hotels.

The property should be sold to LAS, and LAS should be rid of its shares in Bisichi. Clarity of purpose would follow (for both companies), and so would share liquidity.

I don't have stockopedia, but with 10.7m shares issued, I don't see how they get an £18m profit and 53p eps? (The 53p makes sense, but not the £18m)

And any attempt at forecasting profit necessarily involves wild guesswork on production volume, how much Transnet will let them export, and of course, the price of coal.

£18m implies a record last quarter in every respect. I would say more like £6m to 8m would be very good, if all goes significantly well between now and year end.

I completely agree that the property side of the business has no relevance to Bisichi and would be better off liquidated or sold to LAS. It is a legacy of the curious structure of the business that Sir Michael started with (LAS), and has no relevance to Bisichi.

Likewise, Bisichi has no relevance to LAS, and the 41% partial ownership of Bisichi by LAS just muddies the waters and sucks up much needed share liquidity.

As I said to Andrew Heller at the AGM, they either need to merge the businesses into a cohesive conglomerate, or far preferably, separate them. What they currently have makes no sense, benefits nobody, and has no synergy, particularly to the casual investor.

I get what they are doing with their investments i.e. investing their retained profits within the industry in anticipation of a future date post Black Wattle. Clearly they have employed John Wong as an in-house investment manager to run the investments, although the ambiguity of those investments has very poor optics.

Yes they have nearly £8m of borrowings, but they also have £11m of cash and mined coal, plus all the coal in the ground.

I look at it this way. If the assets they have are disposed of, developed, invested and operated even just reasonably well, there is a pile of good news spectacularly in excess of the pitiful current market cap.

The excess staff costs last year were bonuses not pay rises, and are not set to be repeated this year. Their director costs get some people very wound up on here, but in truth, doubling or halving the director costs would have practically no impact on the share price. Plus Sir Mike was a very large part of those costs last year, for obvious reasons not repeated.

I hate mission statements, but if ever there was a company that would benefit from one, this is it.

What are they aspiring to do?

How are they proposing to do it?

What is the dividend policy? (ie Thungela is 'at least 30% of FCF').

Sir Michael was a domineering character and called the shots. Andrew and John are genial characters with decent qualifications. As of now, the change of regime has yet to become apparent, but it will.

I am pleased to hear that the truly terrible website is shortly to be replaced.

No, you can't be 'certain' of that, as there necessarily is a direct correlation between the two listings.

My point was that you described your calculation as 'rough' ie not 100% accurate, and then questioned a tiny variation.

10.2 is roughly 10. But it is also 2% more than 10.

You produce what you say is a 'rough' calculation, and then write a post seeking an explanation for an apparent 1.2% variance?

I really don't know what sort of answer you are expecting?

A hilarious fact is that Bisichi could buy back the entirety of its share capital with its investment portfolio alone.

Its cash, its property and its mining business are currently valued at zero.

I'm minded to agree. I am pretty comfortable that you could live very well indeed on the dividend if you had £1m to spend on this share. This year, with a much diminished dividend, £150k? £200k?

There are not many companies that you can say that about.

Christ, I wish people would stop responding to that south coast clown. Reading responses to drivel is as painful as reading the (blocked) drivel itself.

Yes, the standout negative to me is the incredibly low export volume due to Transnet. I rather suspect the bigger players were able to bully their coal onto the trains that did run, at the expense of small players like these guys.

Probably my one actual concern is the rather vaguely described 'geological issue' that hampered production in H1 2023. A lot of money was spent in H1 2022 investing in what was described as an investment in future production capacity at Black Wattle, so it is disappointing to hear they have been struggling to produce.

If you dropped 2021's domestic and export volumes onto H1 2023 costs, the picture would have been very substantially rosy.

I suspect we are in for a period in which optimists are able to buy very cheaply, and pessimists exit the scene.

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.

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.

Very old, family operated company.

I would say fraud less likely here that pretty much anywhere.

Father recently died.

2 sons, 2 companies.

One company (LAS) owns 41% of the other (BISI).

Communication is poor. Website is feeble, liquidity miserable, dividends conservative, and coal rules out many potential buyers. But then you have a very stable and substantially profitable business, with cash and cash equivalents alone greatly in excess of market cap.

To my eyes, it is madly cheap, so I have progressly bought up a substantial holding. It will be interesting to see what effect the generational change has on the style and presentation of the company.

I also hold Thungela. 10 times the size, superb communication, vast dividends. There are very few cheaper shares out there. This is one of them.

Yes, I have addressed the transparency of their investments on here before, and had a 30 minute conversation with Andrew Heller about it after their AGM, which I attended.

I understand that the investments are holdings in larger companies rather than small, speculative, minnows.

I 100% agree with you on liquidity. I also told AH that in my opinion, the 41% partial overlap of share ownership of Bisichi by LAS was the worst of all worlds. I would suggest a full merger, or complete separation of the two companies. As it is presents a confused buggers mess of unbalanced incentives.

He did comment that the appointment of John Heller to the Bisichi board would increase the call for Bisichi to pay bigger dividends.

Why would you expect to hear about a dividend before the interim results are released, Dark Knight?