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Management shouldn’t be taking so much cash out of this business, morally wrong
TGA is clearly the much better pick in this sector
Seems to be a few issues that have contributed to the poorer performance compared to equivalent period in 22.
RB coal price and Transnet are out of their control but seems like they are addressing the output levels from their mines so this should be reflected in the FY results
Looks like a few investors are throwing the towel in.
Yes, the standout negative to me is the incredibly low export volume due to Transnet. I rather suspect the bigger players were able to bully their coal onto the trains that did run, at the expense of small players like these guys.
Probably my one actual concern is the rather vaguely described 'geological issue' that hampered production in H1 2023. A lot of money was spent in H1 2022 investing in what was described as an investment in future production capacity at Black Wattle, so it is disappointing to hear they have been struggling to produce.
If you dropped 2021's domestic and export volumes onto H1 2023 costs, the picture would have been very substantially rosy.
I suspect we are in for a period in which optimists are able to buy very cheaply, and pessimists exit the scene.
A hilarious fact is that Bisichi could buy back the entirety of its share capital with its investment portfolio alone.
Its cash, its property and its mining business are currently valued at zero.
EdwardSeaton,
I'm not sure its hilarious, but yes it could do that in theory, but what about the near £8M of debt it has & the near net £4M of trade payables (after deducting the trade receivables) ?
The property portfolio should be sold off immediately, except for the potential development one where they nee to finally make a decision to seel it to someone else or go ahead & build it. The property portfolio is not increasing in value & all they do is pay £200,000 a year to a company controlled by the other son to manage it for them.
Payoff the debt with it, thus cutting out the £450,000 in interest payments in just the last 6 months.
No-one knows what these listed investments are or how liquid they are to get out of.
As for the coal operation, it would seem that all of these issues last year & this year are no-ones fault, because no-one seems to be accountable for the failings.
The staff got massive pay rises last year not because of there good performance workwise but simply because the coal price rose so much.
LOTM
I completely agree that the property side of the business has no relevance to Bisichi and would be better off liquidated or sold to LAS. It is a legacy of the curious structure of the business that Sir Michael started with (LAS), and has no relevance to Bisichi.
Likewise, Bisichi has no relevance to LAS, and the 41% partial ownership of Bisichi by LAS just muddies the waters and sucks up much needed share liquidity.
As I said to Andrew Heller at the AGM, they either need to merge the businesses into a cohesive conglomerate, or far preferably, separate them. What they currently have makes no sense, benefits nobody, and has no synergy, particularly to the casual investor.
I get what they are doing with their investments i.e. investing their retained profits within the industry in anticipation of a future date post Black Wattle. Clearly they have employed John Wong as an in-house investment manager to run the investments, although the ambiguity of those investments has very poor optics.
Yes they have nearly £8m of borrowings, but they also have £11m of cash and mined coal, plus all the coal in the ground.
I look at it this way. If the assets they have are disposed of, developed, invested and operated even just reasonably well, there is a pile of good news spectacularly in excess of the pitiful current market cap.
The excess staff costs last year were bonuses not pay rises, and are not set to be repeated this year. Their director costs get some people very wound up on here, but in truth, doubling or halving the director costs would have practically no impact on the share price. Plus Sir Mike was a very large part of those costs last year, for obvious reasons not repeated.
I hate mission statements, but if ever there was a company that would benefit from one, this is it.
What are they aspiring to do?
How are they proposing to do it?
What is the dividend policy? (ie Thungela is 'at least 30% of FCF').
Sir Michael was a domineering character and called the shots. Andrew and John are genial characters with decent qualifications. As of now, the change of regime has yet to become apparent, but it will.
I am pleased to hear that the truly terrible website is shortly to be replaced.
I actually don't mind the UK property business - I think it's value is obscured by the fact that it's owned by a SA coal producer. Imagine what value you would ascribe to a property business with £10m+ of property, annual rental income of ~£1m, and a further £10m+ cash/investments. Haven't looked into the potential London development but would imagine there's probably another few £m value in that.
The way I look at it you're effectively getting the (profitable) coal business for free, with lottery ticket earnings potential if the thermal coal price tracks higher for longer again (and the rail transport issues are resolved).
On the other hand... corporate governance issues are real, and the commentary about looking for further coal based M&A opportunities is a potential concern until potential deal economics become clear.
Interesting to note that since the trading update Stockopedia have new forecast earnings figures. £18M profit and £0.53 eps. So even on lower profit we are still only trading on a forward per of 2.8.
I don't have stockopedia, but with 10.7m shares issued, I don't see how they get an £18m profit and 53p eps? (The 53p makes sense, but not the £18m)
And any attempt at forecasting profit necessarily involves wild guesswork on production volume, how much Transnet will let them export, and of course, the price of coal.
£18m implies a record last quarter in every respect. I would say more like £6m to 8m would be very good, if all goes significantly well between now and year end.
StraightAIM - I'm certainly not saying the UK property business is bad - I'm just saying that the market will always see it as a bizarre irrelevance to what is a coal mining business. It's just as if Oxford Nanopore were to buy half a dozen small country house hotels.
The property should be sold to LAS, and LAS should be rid of its shares in Bisichi. Clarity of purpose would follow (for both companies), and so would share liquidity.
RB Coal price moving up. Coal price in general edging up. Electricity prices edging up. Oil price up quite a bit. Bodes well - fingers crossed.