reports
- Ben Davis
- Tom Price
- Yuen Low
LIBERUM: Commodity redEYE - China’s short coal, again
Coal prices are languishing at shoulder season-lows + industry feedback suggests coal inventories across Asia/Europe are high/rising …so why has China just officially terminated its self-imposed ban on Australian coal imports? Is it a charm-offensive, to engage Australia’s still-new federal government? Perhaps. But a review of China’s power industry signals suggests that a fundamental reason to restore this 80Mtpa trade link may also exist…
- Ben Davis
- Tom Price
- Yuen Low
LIBERUM: Thungela* - Refreshing target price post dividend
We are refreshing our target price after the shares went ex-dividend on 20 April. The £1.78/share dividend payment is equivalent to an annualised yield of 38%. We are forecasting dividends of £3.95/share for FY23 and £3.51/share for FY24. We are reasonably comfortable with our 12Mt coal export estimate for 2023. Though the run-rate to Richards Bay recently dipped, Anglo American struck an optimistic note on a better second half for rail logistics, as new investment in locomotives bears fruit.
- Ben Davis
LIBERUM:Fireside Chat with July Ndlovu, CEO of Thungela*
Liberum catches up with July Ndlovu, CEO of Thungela, widely regarded as best dressed CEO in the FTSE and who also brings a wealth of experience in both operating in South Africa and the world of coal (currently Chairman of the World Coal Association). We cover all the hot topics including a possible Teck/Glen tie up, Thungela’s proposed acquisition of the Ensham mine in Australia and the hopes & concerns for Transnet going forward.
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Ben Davis
- Tom Price
- Yuen Low
LIBERUM: Thungela* - Results inline, guidance lowered on TFR
Thungela had a stellar 2022, with R29.5bn of EBITDA (Lib est R30.6bn). It has announced a further dividend of R40/sh (Lib est of R39.6/sh), in spite of losing 3Mt of export sales to poor Transnet Freight Rail (TFR) performance. These issues continue, and management has had to cut export saleable production guidance to 10.5-12.5Mt; previously >16Mt, and in-line with our forecasts of 12Mt. No significant changes to earnings. We will update our coal forecasts at forthcoming quarterly review.
- Liberum Research Team
- Liberum Research Team
SFR SEVERFIELD
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KIE KIER GROUP PLC
FAN VOLUTION GROUP
OCI OAKLEY CAPITAL INVESTMENTS
PAGE PAGEGROUP PLC
TOWN TOWN CENTRE SECURITIES PLC
CTEC CONVATEC GROUP PLC
HMSO HAMMERSON PLC
1B3N THUNGELA RESOURCES LTD
DOM DOMINGUEZ & COMPANIA
- Ben Davis
- Tom Price
- Yuen Low
LIBERUM: Commodity snapSHOT - Power inputs – price floors forming
Global prices for two key fuels used in base load power generation – Thermal Coal and Natural Gas – have now fallen by 40-70% from their early Dec-23 peaks. The pullback is on the demand-hit of an abating northern winter – compounded this year by other mainly Europe-centric factors. Highly, positively correlated coal/gas price performances themselves reflect efficient, mutual fuel substitution by major coal-/gas-fired power-gen industries of Europe-Asia-Americas. It follows that we expect key pr...
- Liberum Research Team
- Liberum Research Team
- Ben Davis
- Tom Price
- Yuen Low
LIBERUM: Thungela* - Ensham in, South Africa down
We have incorporated Ensham in our forecasts, adding £1.20/share to our valuation. We expect the Board to smooth capital returns by accommodating the purchase of the equity stake, dropping the final dividend to £1.98/share. Sadly, hopes of a swift Transnet recovery have gone, so we have cut our South Africa exports for 2023/24 to 12Mt and 13Mt (from 15Mtpa). Overall, we have also cut our price target to £16.80sh from £18.10, maintain BUY, 68% upside.
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Liberum Research Team
- Ben Davis
- Tom Price
- Yuen Low
LIBERUM: Thungela* - Right place, price, size & commodity
Thungela has entered into an agreement with Audley Capital and Mayfair to purchase an 85% stake in the Ensham coal mine through Sungela Holdings, of which it will own 75% (effective interest, 63.75%). The cost of this share is A$267m, which also provides a A$68m mezzanine loan to its co-investors. On the face of it, we like the transaction. It’s the right place, price (c.33% discount to TGA), size (manageable vs. c.R15bn cash balance) and commodity (sticking with what TGA knows = coal).
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