Bisichi Share Discussion Threads

[e43] 20/4/2022 08:23

Future looking very bright, excellent extension of mine life.Should now start to attract more investors.

[tim000] 20/4/2022 07:48

Forward p/e is almost certainly under 1 (given prices in forward markets for the rest of 2022). The amount of profit being earned this year is so high that I have a very high level of confidence in that statement.

[tim000] 20/4/2022 07:46

The main thing for me was the fact that the business continued to perform consistently. If that continues as the company expects, profits will jump in H1 this year: BISI reports for example the Benchmark API-4 coal price increasing from $125 in 2021 to $238 in Q1 2022. Even discounting the price increase by 50% implies a revenue increase of ca US$15-20 mn in Q1 alone.

[rimau1] 20/4/2022 07:44

The investment case is now derisked from my perspective. Tim003 - i’m guessing we are currently on a 2022 forward earnings multiple of under 2? Probably more importantly the discount to book value must be significant!

[tim000] 20/4/2022 07:38

Indeed! And at minimal cost. Another positive was that exports increased to 320k tonnes, from 230k tonnes the previous year. The company doesn't provide details of its investment holdings, but these increased substantially - partly due to capital gains and partly increased investments by the company. Looking forward to a hike in the divi at the Interims in late Aug.

[rimau1] 20/4/2022 07:10

Results out! Life of mine extended by 8 years. Fantastic stuff!

[tim000] 17/4/2022 08:46

I haven’t. On the plus side, the interims announced that the company would be moving to a new mining area towards the end of 2021, which would improve mining conditions and output - at just the right time to benefit from the hike in coal prices.

[bisiboy] 16/4/2022 19:33

nice to see more traffic on this board after being quite for years.
there are a number of things that might spoil a party but if some of these have happened an announcement should have been made if it was material to operations.
with regards the spoils has anyone looked at the historic ratio of dividend vs bonus

[e43] 16/4/2022 14:01

Yes Tim, all the ingredients look like they're in place now and the shareprice is far more de-risked now than last autumn when I bought in ,due to the current high prices and what should have been excellent trading conditions for BISI these last few months.

[tim000] 16/4/2022 11:16

At the end of December the share price was 90p and the coal price was $135/t. Currently the share price has doubled and the coal price has risen to $305. Assuming a 50% price discount, the increase in coal prices has added about £70 mn to annualised pre-tax profits. By contrast the mkt cap has risen about £10 mn. However one looks at the data, the share price has been extremely sluggish in response to the spike in coal prices - and forward prices suggest these higher prices will last for some time.

[e43] 15/4/2022 11:55

I'll be happy to add also at current levels if the opportunity arises after results (although expecting all things being equal £2.50ish on 2021 results)just need a little more clarity and engagement from the company regarding current situation.

[tim000] 15/4/2022 11:39

I don't mind if it doesn't, I'm tempted to buy more and just sit back like a mini-Heller and snaffle up the dividends. Maybe there'll be a share buyback? The Heller family might be greedy, but as far as I can tell they are competent managers of their respective businesses. They are not incentivised to waste the windfall coming their way in vanity projects.

[e43] 15/4/2022 11:15

Even half of £39m pre-tax would propel the share price a great deal higher!

[tim000] 15/4/2022 10:53

Agreed. At the moment, for 2022 I'm assuming a 10% discount for exports and 60% for domestic sales (relative to the API-4 Benchmark), giving an overall average of about 50%. Given current spot and forward coal prices, and annual sales of 1.1 mn tonnes, my model estimates that for each 1pp change in the export share, pre-tax operating profits change by about £1.1 mn pa. Even at zero exports, BISI makes a pre-tax operating profit of ca £39 mn this year!

[e43] 15/4/2022 08:00

The results and the outlook guidance in a couple of weeks time,will shape the direction of travel for the share price especially the current price for the domestic coal they sell in SA.
Hopefully they will be upbeat and this will attract some new investor interest.

[tim000] 15/4/2022 04:58

I imagine there has been no political will in South Africa to address RBCT’s sharply declining coal exports, given that South Africa is being subsidised to phase out coal production for climate change reasons. But all politicians care more about staying in power than sticking to their policy commitments, and clearly the need for coal is now more pressing than any climate change commitments. As I say, given the will of European industry and politicians and their South African counterparts, surely the decline in South African coal exports can be reversed fairly quickly? I think I saw something about European coal buyers trying to import South African coal via other terminals than Richards Bay for example.

[tim000] 15/4/2022 04:46

Yes, I agree. Coal is clearly not fashionable in the UK. The EU is looking to phase out consumption of Russian coal asap, with the current support of its population who are appalled that the EU (especially Germany) is financing Russian mass murder in Ukraine. I’ve posted a link to a news item that Europe is turning to South Africa as one substitute. Of course South Africa is seeing a sharp decline in RBCT exports due to disruption of the rail network associated with materials theft etc. But given the political will, one would hope that these issues could be resolved within the next couple of years - coinciding with the EU ceasing Russian coal imports. It’s possible therefore BISI might see its own coal exports ramp up before Black Wattle expires. And no doubt BISI will be looking to extend production one way or another. Given the outlook for coal prices and global demand for South African coal, it’s by no means impossible that BISI could be valued in the hundreds of millions in the next few years. The Heller family have the chance to earn their inflated salaries, if they can extend the life of mine and overcome logistical problems for exporting coal.

[e43] 14/4/2022 22:10

The lack of investors 'finding' BISI is a little strange Tim for sure,but also the BB's for TGA are also remarkably quiet considering the staggering rise since flotation .I feel UK investors are instinctively negative on coal probably based on the demise of the UK coal industry,and all the environmental twaddle peddled in the media.

[tim000] 14/4/2022 17:42

Based on actual and estimated sales volumes in 2021, TGA’s current mkt cap is £71 per tonne, compared with under £17 per tonne for BISI. As has been commented before, BISI have lower exports (20% vs 60%), a much lower mine life but have significant property assets too. Margins for BISI are possibly about $70/t in 2022 H1, meaning operating profits in the half year may be about 50% more than the current mkt cap.

[tim000] 14/4/2022 11:14

Yes, but BISI export only 20% of their coal; the leverage of the share price to export capacity at RBCT is far less than for TGA. That has been reflected in the very different share price movements of the two stocks. Whereas one could argue that the TGA share price had risen too quickly, that is very far from the case for BISI, which could export nothing and still be worth far more than the current mkt cap.

[callumross] 14/4/2022 10:56

This from TGA. Hope it isn't similarly affecting BISI;

[tim000] 14/4/2022 04:30

We posters here seem to be living in some parallel universe. A chart such as BISI’s share price normally attracts hoards of punters (“the trend is your friend” etc). But there are days without a single post! And I seem to be the only buyer in the market. Can’t wait for news that will enlighten us all on operations at the coal face.

[tim000] 12/4/2022 23:38

Latest RBCT fob export prices are over $300 for Q2, $295 for Q3 and over $275 for Q4. No wonder TGA continues to rocket.

[tim000] 09/4/2022 07:57

No, I was too late hearing about them, and won’t buy them now in principle, given the share price rise. I hold a lot of Aussie coal miners, which are better value and more mature businesses with less execution risk.

[divmad] 09/4/2022 07:16

Tim, have you looked at Ben as another met coal producer?