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Some statistics (tabulated based on total web visits, not actual sales) for Indonesia (not sure of credit ability as well though):
https://ecommerceiq.asia/top-ecommerce-s...1b526-dcf7
There seems to be a clear market leader in Lazada so far, but other folks Blibli.com and Mataharimall.com are owned by the Godfathers and have plenty to burn, while Ebay has a presence through Blanja. It's a crowded place for sure and i am not sure what 1 million will do if the Riadys have sounded out that they are going to spend 500mil for Mataharimall.com.
http://www.vcpost.com/articles/90853/201...libaba.htm
A rational person most probably wouldn't try to use 1 million if there is already a known competitor with 500mil. In Indonesia, it might be a small part of a larger business deal?
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Is this miner hoping to strike gold, like all the other big e-commerce players?
I wonder how many prospective deals that the management had gone through to decide on this.
Shareholders should be worried if management has shifted their focus.
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(30-08-2017, 11:27 PM)karlmarx Wrote: Is this miner hoping to strike gold, like all the other big e-commerce players?
I wonder how many prospective deals that the management had gone through to decide on this.
Shareholders should be worried if management has shifted their focus.
I agree that they should not be dabbling in stuff that's not related to the core business
On the other hand though, the vested capital is tiny at under SGD 1mil
It also tells me that they have more than ample liquidity to handle the MTNs due in Jan 2018, otherwise they wouldn't be committing capital into a startup
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Geo Energy refinanced their 7% US$100m bond with one that an 8% US$300 bond maturing in October 2022. But they have the option to redeem early in October 2020.
http://infopub.sgx.com/FileOpen/GER%20-%...eID=472153
This is an aggressive move by the management in 2 ways.
1) Raising more than what they need to refinanace, they intend to expand. Which means they plan to use US$175m to acquire more mines, after taking into account the full repayment of the advances, US$15m-US$25m, received from Engelhart Commodities. Earlier, Geo Energy spent US$90m on the acquisition of TBR. So Geo Energy could purchase 2 more mines the size of TBR, making its leveraged business even more pronounced to the nuances of coal prices.
2) The cost of the coupons on the P&L is US$24m annually. Last FY, Geo Energy brought in profits of US$23m. In the last 12 months, this figure is US$47m. So it can be seen that the coupons are going to be a drag on results. And the longer it takes for management to invest the additional US$175m, the bigger the drag the coupons will have on the bottom line. And then again there's the possibility that the investments do not work out as expected. There is the possibility that they bleed from the losses cause by low coal prices, on top of coupon payments.
An unleveraged coal miner would make an ideal investment if the price is right, since the only significant risk will be from coal price and this could be taken into account by applying the appropriate discounts. For Geo energy, which is now highly leveraged (two times equity), the risk has become disproportionately amplified to the extent that it is speculative to buy at any but the cheapest price. And even then, only a small position should be taken to be conservative.
If the worse should happen -- coal price crash -- Geo Energy may fold like heavily-leveraged high-coupon-payments China Fishery did. But Geo Energy may not be revived like China Fishery is able to. Reason being fishes regenerate in a matter of months and coal takes millions of years. Which is why there are more buyers for fishing quotas than coal mines.
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(30-09-2017, 08:37 PM)karlmarx Wrote: Geo Energy refinanced their 7% US$100m bond with one that an 8% US$300 bond maturing in October 2022. But they have the option to redeem early in October 2020.
http://infopub.sgx.com/FileOpen/GER%20-%...eID=472153
This is an aggressive move by the management in 2 ways.
1) Raising more than what they need to refinanace, they intend to expand. Which means they plan to use US$175m to acquire more mines, after taking into account the full repayment of the advances, US$15m-US$25m, received from Engelhart Commodities. Earlier, Geo Energy spent US$90m on the acquisition of TBR. So Geo Energy could purchase 2 more mines the size of TBR, making its leveraged business even more pronounced to the nuances of coal prices.
2) The cost of the coupons on the P&L is US$24m annually. Last FY, Geo Energy brought in profits of US$23m. In the last 12 months, this figure is US$47m. So it can be seen that the coupons are going to be a drag on results. And the longer it takes for management to invest the additional US$175m, the bigger the drag the coupons will have on the bottom line. And then again there's the possibility that the investments do not work out as expected. There is the possibility that they bleed from the losses cause by low coal prices, on top of coupon payments.
An unleveraged coal miner would make an ideal investment if the price is right, since the only significant risk will be from coal price and this could be taken into account by applying the appropriate discounts. For Geo energy, which is now highly leveraged (two times equity), the risk has become disproportionately amplified to the extent that it is speculative to buy at any but the cheapest price. And even then, only a small position should be taken to be conservative.
If the worse should happen -- coal price crash -- Geo Energy may fold like heavily-leveraged high-coupon-payments China Fishery did. But Geo Energy may not be revived like China Fishery is able to. Reason being fishes regenerate in a matter of months and coal takes millions of years. Which is why there are more buyers for fishing quotas than coal mines.
"1) Raising more than what they need to refinanace, they intend to expand. Which means they plan to use US$175m to acquire more mines, after taking into account the full repayment of the advances, US$15m-US$25m, received from Engelhart Commodities. Earlier, Geo Energy spent US$90m on the acquisition of TBR. So Geo Energy could purchase 2 more mines the size of TBR, making its leveraged business even more pronounced to the nuances of coal prices."
Just wanna point out that only $71.5mil of the $100m bond issue previously remains, i.e. they only owe $71.5mil, not the $100m that you have used in your discussion above.
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Thanks for pointing that out. That means US$28.5m more for buying coal mines!
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It is not wise to value GER using DCF because there is no way of predicting the GER's selling price of coal; GER does not sell its coal on long-term fixed-price contracts. Coal price could soar, sending cashflows higher, or plunge, sinking the entire company. Without any certainty in its coal selling price, one could plug in any future cashflow numbers they think is likely, but how realistic would that be? And will such a basis for investment inspire confidence in the investor, should things start looking bad?
My 2 cts worth.
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(28-10-2017, 04:41 PM)karlmarx Wrote: It is not wise to value GER using DCF because there is no way of predicting the GER's selling price of coal; GER does not sell its coal on long-term fixed-price contracts. Coal price could soar, sending cashflows higher, or plunge, sinking the entire company. Without any certainty in its coal selling price, one could plug in any future cashflow numbers they think is likely, but how realistic would that be? And will such a basis for investment inspire confidence in the investor, should things start looking bad?
My 2 cts worth.
yup.
DCF is useless if there's no reasonable predictability with regard to the cashflow.
On this same point, even earnings may not be that useful for that same reason, although the volatility in earnings would be much less pronounced.
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