Neo Cheow Hui, CEO of logistics and building materials company GKE Corp 595 , last week raised his stake in the company. On June 6, Neo acquired 300,000 shares on the open market for 7 cents each. This gives him a total interest of 28.75 million shares, equivalent to 3.7% of the company, up from 3.67%. As at Nov 30, the company’s net asset value was 11.6 cents per share.
GKE Corp’s two main businesses have seen uneven performance in recent years. On the one hand, its warehousing space here in Singapore is enjoying strong demand as customers stock up to ward off supply chain disruptions. On the other hand, its ready-mixed concrete plants, based in China, suffered from lower demand amid the pandemic.
Weighed down by sales in China
On Jan 12, the company reported earnings in 1HFY2023 ended Nov 30, 2022 dropped 73.8% y-o-y to $1 million from $3.81 million in 1HFY2022. Revenue was largely unchanged at $54.7 million versus $55 million a year ago. In terms of business segments, sales from logistics increased by 19.8% y-o-y to $43.3 million while sales from China were down 40.4% y-o-y to $11.2 million.
Besides lower sales from operations in China in 1HFY2023, the company had to increase the allowance for expected credit loss for receivables over there. The bottom line was also hurt by unfavourable forex movements. “We will continue to work towards striking a balance and building a sound foundation for the two diverse business segments in two different countries,” says Neo in his earnings commentary.
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Elsewhere, Indonesia-based coalminer Geo Energy Resources RE4 resumed its share buybacks. On June 6, the company acquired 800,000 shares on the open market at between 23 cents and 24 cents each under a fresh mandate given by shareholders. The following day, it bought back 1.8 million shares at between 23 and 23.5 cents each. At these levels, the share price is trading at around its 52-week low.
The last time the company bought back shares was on Jan 18 and 19 when it acquired one million shares at 32 cents each and 700,000 shares at 32.5 cents each on the open market respectively.
On May 29, executive chairman and CEO Charles Antonny Melati transferred 40 million shares to an unnamed family member as a gift, leaving him with around 253.35 million shares, equivalent to 18.14% of the company, down from 21% previously.
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In its May 12 business update for 1QFY2023 ended March, Geo Energy Resources reported earnings of US$16 million, down 60% y-o-y. Revenue came in at US$131.9 million ($177.62 million), down 13% y-o-y as sales volume decreased 23% y-o-y even as prices increased 12% y-o-y.
Not a good time for coalminers
Geo Energy Resources will pay an interim dividend of 0.5 cents, representing a payout ratio of 32.8% and a dividend yield of 13.6% based on its March 31 share price.
As at March 31, Geo Energy held cash of some US$209 million and recorded a debt-over-equity ratio of 0.01 times.
Geo Energy recognises that with growing awareness of sustainability practices, many institutional investors are avoiding coalminers like themselves. Still, Melati maintains that coal remains a “significant pillar” of power generation and industrial sectors.
“China and India continue to lead coal-fired power generation activities and European countries have been temporarily switching to coal due to the comparatively higher prices for natural gas, low hydropower generation and a modest increase in nuclear power generation,” he adds.
Melati says that the shift to clean energy is a gradual process that requires strong backup from coal as emerging economies continue to rely on coal. “We are making active progress towards value accretive acquisitions of producing coal mines to increase our reserves and production volumes and achieve diversification. We are eyeing our revenue growth and expanding revenue streams towards building a sustainable business.”
