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Iron and coal has been on a run 1H this year. Was vested in Fortress Minerals (iron) for awhile, made some money and left.
Currently vested in Golden Energy. These are just short term punts because I always felt this type of industry driven by the vagaries of supply and demand and are narrowly focus on a single type of asset/product.
You can count on the greed of man for the next recession to happen.
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Agree with the above.
If you have been following this or similar stocks closely for the past couple of years, it would be apparent to you why the p/e ratio is so low. Being dependent on very volatile market forces for the selling price of your product means this year's profit could be $100 but next year may be -$100. There is no floor to the price of coal.
Other reasons for its low p/e may include the market's dislike for old energy, and this is not likely to fade away, even though old energy -- including coal use in Asia Pacific and North Asia -- may still have very long lives.
I wouldn't treat this as a long-term investment unless you believe coal can remain at present or higher levels for the next 5-10 years.
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Results appear super solid for the short term punters. Operating profit up 4x for 1H
https://links.sgx.com/FileOpen/Geo_1H202...eID=678196
More amazing is that cash position has exceeded US$110mn as of announcement (10 Aug) while as of results it was only US$84mn, indicating US$26mn cash profits in less than 1.5months. As coal prices are higher as of 10 Aug (US$69.53) compared to July's US$58.34, quite likely 3Q will see total cash profits higher than US$50mn. Meaning, 3Q's profits might be equal to or even stronger than 1H's.
A key question: Will Geo continue to be a good punt, if so for how long? The company is looking to diversify away from coal - if the cashpile is deployed for lower returns project, this could be a problem.
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@wonghw12:
Coal prices nearing US$80 / tonne. Geo Energy & Golden Energy will see coal profits at unprecedented levels.
The current demand is very high from China and regional countries. Longer-term coal is facing an existential crisis as climate change policies of governments and ESG concerns lead to a drying up of funds for investing in coal mine supply.
Thus, coal prices are expected to rise even further in the next few years.
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12-09-2021, 08:40 PM
(This post was last modified: 12-09-2021, 08:48 PM by CY09.)
https://links.sgx.com/FileOpen/Geo%20Med...eID=683245
Company is redeeming its final tranche of bonds and reveals post redemption they will have 60 mil of cash. In a span of 3 months, the group cash holdings has grown by 36 million and this included paying off their prepayment to Macquarie.
Its quite a big turn of fortunes and probably something to keep watch if Indonesian coal prices will continue at this elevated levels
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Up beyond anyone's imagination, coal futures have touched US$110 / tonne.
https://nextinsight.net/story-archive-ma...-100-tonne
How will Geo Energy & Golden Energy utilise their stupendous profits that have suddenly appeared? Geo has a dividend track record, more so than Golden. But Golden has a vision and a recent track record of building a wider base of commodities.
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I have actually been tracking the coal pricing for quite a while now. Even though I know that there is money to be made buying these coal companies, but somehow I just steeled myself against doing it. Instead I invest in companies that provides for renewable energy, such as lithium companies.
I am not trying to force my standards on others, but somehow I am beginning to think I should be putting my money where my beliefs are. And I believe in climate change and the need to switch out from fossil fuels. So I am not investing in coal miners. I am just wondering whether anyone else here thinks the same or investing is just investing?
Please do your own due diligence. Any reliance on my posts is at your own risk.
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(05-10-2021, 02:17 PM)Squirrel Wrote: I have actually been tracking the coal pricing for quite a while now. Even though I know that there is money to be made buying these coal companies, but somehow I just steeled myself against doing it. Instead I invest in companies that provides for renewable energy, such as lithium companies.
I am not trying to force my standards on others, but somehow I am beginning to think I should be putting my money where my beliefs are. And I believe in climate change and the need to switch out from fossil fuels. So I am not investing in coal miners. I am just wondering whether anyone else here thinks the same or investing is just investing?
My thoughts
1. Coal price today reflects the severity of its shortage. If coal were to be eliminated, a worse energy shortage would ensue. Societies will have to make choices between stopping economic activity versus letting poor folks freeze to death this winter, to put things very simply. What would your choice be between climate change, livelihoods and human lives? This is not just a debate between climate change and profits.
To put it another way, China has opted to restore funding to the coal industry to tackle the energy shortage - do you think this is morally right or wrong?
2. I believe that coal can't and shouldn't be eliminated in the short term as it is impractical. Starving it of funding or avoiding investments entirely may lead to coal assets falling into hands of those who do not care about climate change at all. Is this the best course of action to save the planet?
3. There's no shortage of investment ideas, coal is just one of the many plays.
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(05-10-2021, 08:15 PM)wonghw12 Wrote: (05-10-2021, 02:17 PM)Squirrel Wrote: I have actually been tracking the coal pricing for quite a while now. Even though I know that there is money to be made buying these coal companies, but somehow I just steeled myself against doing it. Instead I invest in companies that provides for renewable energy, such as lithium companies.
I am not trying to force my standards on others, but somehow I am beginning to think I should be putting my money where my beliefs are. And I believe in climate change and the need to switch out from fossil fuels. So I am not investing in coal miners. I am just wondering whether anyone else here thinks the same or investing is just investing?
My thoughts
1. Coal price today reflects the severity of its shortage. If coal were to be eliminated, a worse energy shortage would ensue. Societies will have to make choices between stopping economic activity versus letting poor folks freeze to death this winter, to put things very simply. What would your choice be between climate change, livelihoods and human lives? This is not just a debate between climate change and profits.
To put it another way, China has opted to restore funding to the coal industry to tackle the energy shortage - do you think this is morally right or wrong?
2. I believe that coal can't and shouldn't be eliminated in the short term as it is impractical. Starving it of funding or avoiding investments entirely may lead to coal assets falling into hands of those who do not care about climate change at all. Is this the best course of action to save the planet?
3. There's no shortage of investment ideas, coal is just one of the many plays.
1) I am not advocating for eliminating all coal immediately. I would rather see it phase out via starving it from funding both debt and equity wise, I am actually happy to see high coal prices which shows the strategy is working. It would speed up adoption of renewables.
2) Not going to dwell on this point since I can’t make sense of it. I don’t think whether it’s in the right hands or not is related to whether funding gets starved. A rich person who can develop an asset without funding doesn’t mean he is less morally upright. It still depends on regulations more than anything else.
3) Exactly, there is no shortage of investment ideas. So my thinking is why pursue an investment against my beliefs? Which is why I am asking here whether forummers segregate investments from beliefs. Do you pursue $$$ regardless of outcome? Or do you think it doesn’t matter since even if you don’t fund it, someone else would. I choose to not put money into coal companies even though it’s likely that they can generate obscene profits in the near future. I believe starving them of funding is the way to go and I choose not to prolong their survival by adding to their perceived equity value.
Again it’s more of a question out of curiosity. Globally, if you look at the very low multiples coal miners are trading at, I believe I am not alone. Just curious whether there are any here.
Please do your own due diligence. Any reliance on my posts is at your own risk.
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06-10-2021, 09:27 AM
(This post was last modified: 06-10-2021, 09:32 AM by weijian.)
(05-10-2021, 02:17 PM)Squirrel Wrote: I am not trying to force my standards on others, but somehow I am beginning to think I should be putting my money where my beliefs are. And I believe in climate change and the need to switch out from fossil fuels. So I am not investing in coal miners. I am just wondering whether anyone else here thinks the same or investing is just investing?
I do something similar wrt to the sin companies, eg. the gambling and tobacco firms. 2nd order beneficiaries (eg. Kingmens Creatives designing retail experiences at MBS or THG selling a Rolex to a lucky gambler) are fine.
I self excluded myself from all gambling in Singapore. Since I own businesses with an owner's mentality, I don't get to experience cognitive dissonance and so it works fine for me. I tend to believe that principles are only principles if they cost me dearly to hold them.
p.s while there are many people who avoid coal to avoid cognitive dissonance, but intuitive guess is that the "low multiples" that they trade on are mainly due to (1) fear of the notorious boom bust cycles (we can't forget the bust is still very clearly in people's minds. (2) institutional imperative where managers have to restrict their investments due to fund mandate or fear of populists' criticism on "dirty" energy investments.
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