Geo Energy Resources expects to achieve revenue of US$400 million in 1H22, 81% higher y-o-y based on the prevailing coal price as well as the M42 Futures Index price.
In a March 7 business update, Geo Energy CEO and executive director Tung Kum Hon said the company is expecting EBITDA close to US$200 million in 1H22, on top of targeting coal production of between 5 million to 6 million tonnes.
The company has an approved work plan and budget production quota of 12 million tonnes for 2022.
“The impact of Russia's invasion of Ukraine and the sanctions imposed on Russia on the coal industry is expected to continue in the coming years ahead. The supply disruptions of coal in top coal exporters, including Russia, Australia and Indonesia have caused the surge in Asian thermal coal prices to a record high,” Tung said.
Despite the temporary coal export ban by Indonesia in January 2022, Geo Energy delivered 1.4 million tonnes of coal with a revenue of US$78.4 million at an average selling price of US$55.05 per tonne for the two months in 2022. Tung added that the group’s domestic market obligations (DMO) volume was 51% of the total volume sold in these months.
Based on the prevailing coal price of US$95.46 per tonne and DMO sales of 25%, Geo Energy’s cash profit is above US$40 per tonne.
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Tung pointed out that Geo Energy’s share price closed at 55.5 cents on March 4, the highest since 2013. “The company’s 52-week total shareholders return and enterprise value — excluding net cash as at December 31, 2021 and treasury shares — was 243% and US$388 million respectively or EV/EBITDA (2021) at 1.4 times, and less if we use 2022 projected EBITDA.”
Shares in Geo Energy closed 0.5 cents higher or 0.9% up on March 7 at 56 cents.
