Just to substantiate my comment below.
This is from the company's own press release.
Also, lynch, you might wanna relook the production figures again and again. I have reservations about those numbers.
In fact, I have a fair idea of how Q3 production volumes would look like, even before ER.
I don't think the company is going to be able to meet its 10mil production target for 2017, even with TBR coming on in Q4.
Reply to @liuliu : Also, company was very confident in the 10m tonnes production volume last year and this year Q1 in their reports. But after Q2's 1.5tonnes volume, they no longer mention their 10m target in their reports, which indicates the volume wont be looking very good in FY2017. But still, I believe the stock is very undervalued due to current high coal price, and I expect the price gonna maintain high due to China's constant push on their environmental protection measures.
"Concerns about Indonesia making coal miners shunt production for the domestic coal market would not apply to Geo, as they do not have the agreement with the Indonesian government to produce coal for them, unlike Golden Energy. Hence they are able to mine and freely export their coal to foreign, more lucrative markets aka China. But the Indonesian coal market in my view still serves as a good support for coal demand in the future."
Not true.
It does apply to them.
Initially I thought they'd get ard it as they sell to ECTP and ECTP is the middleman that is responsible for reselling to Indo end users or exporting the coal.
But Indonesian law accords a certain percentage of the mine's output must not be exported, and that's tagged to the mine itself, based on the JORC report on the volume of its reserves.
In short, Geo is not affected currently, but if this limit is increased, then yes, they will be affected too.
They cannot "mine and freely export their coal to foreign, more lucrative markets" without any considerations.
Might be prudent for investors who don't do their dd to note that geo energy has very high debt, and a change at macro level or a drop in coal price could send it spiraling like ezion.
Not vested for this reason, but at current price there is definitely value but that is certainly some risk to bear
Thought I shld highlight this since it seems like an over optimistic picture this report is painting. Pls dyodd
Reply to @warster : 1) Pls read the offering circular of the 2022 bonds, there are some terms which could result in a call before the maturity date. The likelihood is not very high at this point.
2) Adaro did not issue a USD bond at the start of 2017, if it did, it probably do not need to pay more than 5.5% (probably in the low to mid 4%), given that Indika is now about mid 5% and Adaro is much much stronger company. I'm not sure if Adaro issued an IDR bonds.
3) At 8%, Geo energy is one of the highest yielding Asia HY bonds in USD, that is not in a distressed situation. It has a B2 rating for a reason, which you can approach Moody's or S&P for the answer.
4) The domestic market obligation (DMO) is not a major factor right now...
5) The new is bonds are yet to be reflected in the historical financial statements (gurufocus)
6) Prepayments from ECTP should be considered somewhat like a debt too..
7) ECTP is not 0 default risk. https://www.ft.com/content/afc1a567-2d7d-3...
Just to substantiate my comment below.
This is from the company's own press release.
Also, lynch, you might wanna relook the production figures again and again. I have reservations about those numbers.
In fact, I have a fair idea of how Q3 production volumes would look like, even before ER.
I don't think the company is going to be able to meet its 10mil production target for 2017, even with TBR coming on in Q4.
Reply to @liuliu : Also, company was very confident in the 10m tonnes production volume last year and this year Q1 in their reports. But after Q2's 1.5tonnes volume, they no longer mention their 10m target in their reports, which indicates the volume wont be looking very good in FY2017. But still, I believe the stock is very undervalued due to current high coal price, and I expect the price gonna maintain high due to China's constant push on their environmental protection measures.
"Concerns about Indonesia making coal miners shunt production for the domestic coal market would not apply to Geo, as they do not have the agreement with the Indonesian government to produce coal for them, unlike Golden Energy. Hence they are able to mine and freely export their coal to foreign, more lucrative markets aka China. But the Indonesian coal market in my view still serves as a good support for coal demand in the future."
Not true.
It does apply to them.
Initially I thought they'd get ard it as they sell to ECTP and ECTP is the middleman that is responsible for reselling to Indo end users or exporting the coal.
But Indonesian law accords a certain percentage of the mine's output must not be exported, and that's tagged to the mine itself, based on the JORC report on the volume of its reserves.
In short, Geo is not affected currently, but if this limit is increased, then yes, they will be affected too.
They cannot "mine and freely export their coal to foreign, more lucrative markets" without any considerations.
Might be prudent for investors who don't do their dd to note that geo energy has very high debt, and a change at macro level or a drop in coal price could send it spiraling like ezion.
Not vested for this reason, but at current price there is definitely value but that is certainly some risk to bear
Thought I shld highlight this since it seems like an over optimistic picture this report is painting. Pls dyodd
Reply to @warster : 1) Pls read the offering circular of the 2022 bonds, there are some terms which could result in a call before the maturity date. The likelihood is not very high at this point.
2) Adaro did not issue a USD bond at the start of 2017, if it did, it probably do not need to pay more than 5.5% (probably in the low to mid 4%), given that Indika is now about mid 5% and Adaro is much much stronger company. I'm not sure if Adaro issued an IDR bonds.
3) At 8%, Geo energy is one of the highest yielding Asia HY bonds in USD, that is not in a distressed situation. It has a B2 rating for a reason, which you can approach Moody's or S&P for the answer.
4) The domestic market obligation (DMO) is not a major factor right now...
5) The new is bonds are yet to be reflected in the historical financial statements (gurufocus)
6) Prepayments from ECTP should be considered somewhat like a debt too..
7) ECTP is not 0 default risk. https://www.ft.com/content/afc1a567-2d7d-3...
cheers, it broke 30 cents today.