Bisichi Share Discussion Threads

[tim000] 02/6/2022 11:00

e43, can’t recall if I’ve mentioned it, but I have fairly large holdings in a lot of Aussie coal miners, and listen to coal professionals on hotcopper, where discussion of coal is prolific. Long-term prospects for thermal and metallurgical coal miners look outstanding, obviously the key issue about South Africa is Richards Bay - the logistical issues don’t just hamper export volumes, but by doing so depress the domestic price seemingly below marginal costs of production. I’ll see if I can learn anything about whether South Africa is proactively addressing these problems, which are costing it a fortune in lost exports and taxes.

[e43] 31/5/2022 22:11

Glad to hear you can get to the AGM Tim, Hope you get some insight regarding the domestic SA coal market etc,and against all reasonable hope make the argument to BOD if they ran the company for all the shareholder's equally the shareprice and dividends would be a great deal higher and everyone richer, rather than the current head down in the trough approach,with outside shareholder's getting the leftover crusts,!
Anyway hope you come away with a favourable impression.

[tim000] 28/5/2022 23:14

The total number of share options is only just over 6% of the share capital, not excessive. I agree that remuneration is excessive for such a small company, I intend going to the AGM to say so. But the share price is still far too cheap in relation to the company’s profitability.

[bisiboy] 28/5/2022 22:58

this company just gets so much better for the boys lets buy out their share options with shareholder funds and then when the time is right (for them) we can issue a lot more share options

[tim000] 28/5/2022 12:02

Assuming the special resolution is passed concerning the company purchasing employee options, the option holders obviously want as high a share price as possible from which to negotiate a deal with the company. AR Heller has 300k options and GJ Casey has 380k options, total average strike price of 79.46p. This is possibly the largest incentive the Directors have to promote a higher share price.

[tim000] 24/5/2022 11:33

True, but the market is so illiquid that they couldn't buy many.

Worth reading this article on why coal is a great investment. I used to work for some of the clowns mentioned in this story!

hxxps://www.conservativewoman.co.uk/the-green-agendas-role-in-global-inflation/

[e43] 24/5/2022 10:58

Would be welcome if our director's used some of their substantial bonuses to buy shares in the open market rather than finding yet more ways to benefit themselves ahead of ordinary shareholder's.

[tim000] 24/5/2022 10:21

The World Bank Pink Sheets show RBCT API-4 coal prices averaged US$120/t in 2021, resulting in a relatively small profit for BISI's coal mining operations - ie total costs including admin etc are under $120/t. The monthly averages for coal prices this year: Jan $168, Feb $196, March $294, April $302 and May looks likely to be around $310-320. Profits will be on ca 320k tpa of exports, hopefully at close to Benchmark prices. 320000*US$130/t margins (for example) = ca £33 mn EBITDA.

[tim000] 23/5/2022 16:33

Richards Bay API-4 futures prices have been strengthening recently; I expect this to continue as European buyers increasingly look for alternative, non-Russian supplies. Profits are going to be BUMPER in the first half of the year, and probably higher still in the second half. It will be very interesting to see what the Directors do with all the cash. Some will almost certainly go towards unprecedented special dividends.

[tim000] 23/5/2022 16:24

Good post bozzy. The negatives aren't too negative. The Directors will inevitably benefit from their options either way, but as you say the proposal does least damage to the share price. And the Directors' existing shareholdings are quite enough to align their interests with ours. Moreover, the key determinant of the share price over the next few years will be the coal price, which of course the Directors have no influence over, and not the actions of the Directors.

[callumross] 23/5/2022 16:10

From a calculation based on the exercise prices the buyout of the options is going to cost between £650k and £700k.

[bozzy_s] 23/5/2022 15:57

"The Company currently has in aggregate 680,000 options over ordinary shares outstanding which are currently exercisable. As at 19 May 2022, the prevailing share price is in excess of the exercise price of the options.

As an alternative to the exercise of the options the Company could ‘buy-out’; the share option awards that are currently exercisable.

This would avoid the need for the Company to allot shares, for shares to be sold in the market to meet the tax liabilities arising from the exercise and therefore the potential impact to the Company’s share price and on shareholders.

The directors therefore propose that the Company’s shareholders approve a resolution giving the directors the authority and option to buy-out share options for the reasons set out above."


Seems fair enough to me. Instead of directors exercising cheap share options, and potentially having to sell a few to cover tax costs, BISI just pays the directors the difference between the prevailing share price and the exercise price.

Positives:

> No dilution for current shareholders
> No forced selling of illiquid shares, which would hammer the price down

Negatives:

> Directors receive even more cash from the company
> Directors have no additional shareholdings, which might have aligned their interests more with shareholders

[andydaf] 22/5/2022 10:32

Had a punt here after having some tga bonus.Hardly anyone has heard of this lot but after looking at the figures i believe these are trading at a p/e ratio of less than one.Either that means they are going bust or the market has got its sums wrong.When things become clearer after the interims these could well shoot up imho.As always gla and dyor

[e43] 17/5/2022 22:04

As you say it all looks very promising price wise Tim, just a little frustrating the lack of interest in the shares at present!

[tim000] 17/5/2022 21:16

As you’ll know, futures prices for the next year or so are indicating API-4 Benchmark prices of US$200-300/t. Europe will surely look to source more coal from non-Russian countries (South Africa, Indonesia and Australia are mentioned) for the foreseeable future, so I can’t see prices returning to historic norms.

[e43] 17/5/2022 21:05

'Patience and nerve needed here', patience to wait until a few more new buyers turn up . Nerve to believe the export price holds up long enough to totally transform the balance sheet.i.e if coal price stays elevated through the summer past the interim results then all things being equal the mini peak we had a few weeks ago will be easily eclipsed.

[tim000] 17/5/2022 12:03

No doubt my model is imperfect, and may turn out to be optimistic, but it is projecting EBITDA from the coal operations of about £15 mn in the first half of the year and, based on current futures prices, about £32 mn in 2022 as a whole. Eventually the share price will reflect the fundamentals - the upside is obviously enormous. Let’s hope there is a bumper special interim dividend announced in August.

[callumross] 17/5/2022 11:56

With just 6 weeks to the half year end the company are going to report some bumper interims in August given the continuing elevated Richards Bay export prices. Provided of course they are getting they coal away for export at even last years levels! And a bumper 6p dividend to be distributed shortly.

[e43] 12/5/2022 21:43

Richards Bay prices looking v solid,Bisi should be having a bumper Q2.Shareprice will hopefully start to pick up again when a few nervous seller's are out.

[robizm] 27/4/2022 23:33

I hope you are right and they share the profits as if they export 320k tons this year the profits could be double market cap. These coal prices should last a while as gas was due to be short next winter and that was before Russia invaded. Even domestic coal prices have gone up

[tim000] 27/4/2022 21:57

But the upside is a miniscule current valuation relative to the company’s assets and cashflow. My understanding is that outstanding options are under 1 million.

[robizm] 27/4/2022 20:22

Shareholders get 6p dividend and directors take an extra million in benefits. Profits will be huge as coal has been high for 3 months but will shareholders see any ( you might get 20p dividend). This is run for the directors and they have dodgy property deals to boot and tons of options to unload. I would rather TGA than a company who does not care a bit about its shareholders. The directors bonus is more than the dividend

[bisiboy] 27/4/2022 18:53

it could pay a bigger bonus to Mr Helier that would use up some of the spare cash!

[tim000] 27/4/2022 13:49

As usual, very little liquidity around. £24k of share purchases increases the mkt cap by about 100x that!!

[tim000] 27/4/2022 10:23

hxxps://mybroadband.co.za/news/energy/442190-coal-prices-soaring-with-south-africa-coining-it.html