Member Info for Malik-

In the meantime…
Company currently printing >USD3m of free cash flow per day currently… that’s 1.2bn of freecash generation per year at $245/t spot coal.
That compares with market cap ex cash of 1.4bn => nearly 85% freecashflow yield.
DIRT CHEAP

SA Articles today writing that senior figures of ruling party backing the president. Also says therefore unlikely to be impeached. Ruling party has by far majority.
Transnet indicating that things are returning to normal.
This is again a BUYING opportunity.

So focus on the numbers rather than on narrative about politics.
The president said he won’t resign and refutes any wrongdoing.
My reading is in any case, were he ever to be replaced it would be by someone from his same party - and were this to happen it would be a lengthy process.
Trading at these levels when coal is at $260/t and when we have cold spell is an utterly nonsensical.
Again this is a BUYING opportunity.

Coal $260/t…

(And by the way in my $1.3bn free cash flow number above I am indeed factoring in them selling at a discount to spot coal).

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Meanwhile, thermal coal at $250/t…
… And at this level, company generates MONSTER free cash flow of c$1.3bn per year, for a mcap ex cash of $1.6bn.

Focus on numbers.

What this actually means is at 230/t company will be entirely backed by cash aroind September 23…
BUY!

In meantime, thermal coal spot at >$230/t.
Printing money here.
Remember, you only need 190/t coal to have mcap entirely
backed by cash by end 2023.

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No they paid 1x PE.
They are issuing 3% of capital in new shares or so.
That’s the price paid.
The minority at H1 this year is something like USD 35-40m.
That’s for HALF A YEAR. You need to double this and compare with $m of shares issued.
Then you get multiple paid.

Great press release this morning.
Minority buyout where Thungela is paying SUB 1x PE for these assets.
Conservatively that’s 5% on share price accretion since you will be valuing it at higher group multiple not 1x PE.

This is an excellent t time to reload on the shares.
1) Cop27 concluded with a watered down version of the text in which it only refers to phasing down coal and not phasing out coal. It also opens way for gas to be seen as a transition fuel. This is key since gas markets also drive coal markets. So it’s bullish thermal coal.
2) Today should be the day Transet reopens northern rail corridor after derailing interruption. Recall, as I said last week if you add up all the strikes and detailing hit and really say that volumes have been significantly hampered since October you could be looking at free cash flow boost from normalisation of activities or $200-300m next year. And next year is less than a month and half away…
3) Coal prices are recovering as weather also turns colder.
4) At say $190/t coal (which is below spot at >200) the company’s cash will be worth the whole market cap before year end 2023. This is transformative for any company.
On an 80%+ fcf yield ex cash this company is a printing press.
BUY!

Someone here had said first week of Dec, after asking company.

Surprised the shares not reacting positively to this…
a return to normal operation will mean an improvement to free cashflow of $200-300m in a fully year in 2023 (strikes, derailing etc).
This is notable.z

Here we go.

https://www.sowetanlive.co.za/amp/news/south-africa/2022-11-17-transnet-says-main-coal-line-to-be-reopened-by-monday-after-derailment/

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That Seeking Alpha article is missing a key point of the thesis.
He calculates 30% FCF Y. Where he is wrong is he needs to deduct the mountain of cash and use the ex cash market cap to calculate it.
If you do that, on my numbers you end up at >80%.
And that’s transformative to the bull case.

What do you mean first week? First week of December?

The strike then derailing sagas are buying opportunities.
The stock is priced as though volumes have been impaired by near 20% forever.
Evidently these are one offs and will just make next year’s comparables very easy and favourable.
Buy ahead of 2023.

First stop back to 0.3.
This is a massive SHORT