Bisichi Share Discussion Threads

[tim000] 02/7/2022 05:10

If anyone has access to the Johannesburg stock market, Vunani looks very good value, though this is another illiquid stock. Apart from an increasingly profitable financial services business, they are going to start making an awful lot of money from BW this year, which is not priced into the share price at all. And they pay a good dividend too!

[tim000] 02/7/2022 05:05

The World Bank publishes RBCT export prices for June next Tuesday, at which point "outsiders" will have access to all available data to make estimates for BISI cashflow for the half-year. £14 mn post-tax cashflow (excluding any capital gains made on the investment portfolio) remains my best guess.

The outlook for 2022 H2 and 2023 continues to improve. Sterling's decline against the US$ is incredibly helpful. Based on current spot fx rates, the RBCT futures markets are pricing RBCT coal in 2023 Q4 at £166/t, which is slightly higher than the 2022 Q1 outturn of £164/t. BW is going to be printing money for some considerable time, it seems. And yet we remain unknown to the investing community. People still flock to BEN, for example, which is enormously more expensive than BISI, even if it turns out their mine is profitable. (Start-up coal mining ventures are fraught with difficulties.)

[tim000] 28/6/2022 09:52

bisiboy, it's going to be an exciting ride for us all. You hold the record for the cheapest purchase price, now pretty much a 10-bagger. Andy, yes, forward p/e still under 1. My impression is that BISI is invested in some coal stocks.

[bisiboy] 28/6/2022 09:34

think they must have been mentioned somewhere most excitement since june 2008 when i watched them hit the dizzy hights of 450p and i remember seeing a buy note with a £10.00 target price.
sold half of my holding on the way down between £2.00 and pounds £3.00 but tightly holding the balance.
original purchase was under 30p

[andydaf] 28/6/2022 09:25

Why would anyone sell at this price?Inmho still on a forward p/e of less then one with all the other assets thrown in for free.If we are really lucky they have bought other coal stocks as investments and the investment side might be making outsize profits as well.As always GLA

[tim000] 28/6/2022 09:06

16 trades, at most one sale. Hope that continues.

[tim000] 28/6/2022 09:04

Hope so, e43, I have some losses to make up elsewhere in my portfolio. BISI is roughly third on the leaders’ board, and yet no posts here! It’s a strange situation, and also a strange situation that has transformed BISI’s prospects.

[e43] 28/6/2022 09:00

Tim,evens chance 1.7% worth 1M + by Christmas?
Satisfying to see ,after I stopped buying last Autumn I think a whole month went by without one share traded in BISI.

[tim000] 28/6/2022 08:27

If the MMs need some stock, they're in trouble....

[tim000] 27/6/2022 20:02

BISI’s fund of equity investments seems to date back to 1999 at least. The Interims for that year state that the fund at that time was weighted towards commodity stocks, and the fund acted as a liquidity buffer. It’s reasonable to assume that the company’s equity investments are similarly managed today - it makes sense for a coal miner to invest in other mining stocks. Dividends and capital gains should thus beat the wider market.

[tim000] 27/6/2022 15:44

Fairly obvious, but I don't think the Directors are in a closed period, and they haven't yet exercised any options in order to sell them back to the company. One assumes they know that the share price is too low and are holding out for a much higher price, post publication of the interims probably.

[tim000] 27/6/2022 08:34

And that's an aspiration more than a forecast. I can't see it happening. In fact I think it's nonsense. That's a good point re: property, I agree. I assume you mean disposal of their entire property interests, not just the Ealing JV but also their portfolio managed by LAP. I can't see it happening though. I doubt demand for their property portfolio is great at the moment, and the company values the diversification it provides. Given a 110 year history of being a listed company, the Board is unlikely to do anything that increases risk. Finally, while I'm bullish on the future of thermal coal, irrespective of Russia, events can change unexpectedly. Becoming a pure-coal play will increase volatility of BISI's profits and share price - probably in a good way but not necessarily always positively.

[rimau1] 27/6/2022 08:05

Fair point Tim, yes, zero likely demand for Europe is more accurate! Back to BISI, I would like to see them wrap the property JV up into a separate entity or sell it to LAP and leave BISI as a pure coal (and investments) play.

[tim000] 27/6/2022 07:56

Good summary rimau1. "Zero likely demand for coal in 5-10 years time". Maybe in the UK, but the opposite is true in the Far East: construction of new coal power plants continues apace.

[rimau1] 27/6/2022 07:48

Plenty of weekend press (Telegraph, Times) regarding the demand for Coal. To summarise; (1) EU Russian coal import ban begins in August, UK expect to follow as currently UK ban begins from 31 Dec (2) Imports of Russian Coal in H1 significantly higher as countries stockpile ahead of the ban (3)South Africa trying to meet anticipated world demand but struggling due to falling coal production and infrastructure issues (4) coal power stations being turned back on (5) Due to zero likely demand for Coal in 5-10 years time as the world electrifies and decarbonises there are no new coal mines being brought into production. 1-5 above = the perfect storm!

[e43] 26/6/2022 10:43

Yes Tim,all in all by any objective valuation metric ,BISI shares are cheaper and more de-risked now at £2.50 than when I bought my position from 130p down to 95p last Autumn.
ie,since then 8-9 months of v profitable trading , effectively trebled reserves and mining life with profit sharing agreement.
Plus greatly increased coal price,coupled with a disrupted and very tight global energy market, likely to stay at a v profitable level for the foreseeable future.

[tim000] 26/6/2022 09:21

Historically, Australian Newcastle thermal coal has traded at a fairly steady 5-6% premium to its benchmark RBCT equivalent. I'm guessing that's because Australian coal is higher quality. That differential has increased this year (with the hike in coal prices) to about 15%. It's also there in the futures prices too. I don't know whether increased shipping rates might be a factor, but it appears that the RBCT benchmark has some ground to make up, which perhaps it will as European demand ramps up later this year.

[e43] 26/6/2022 08:04

Always a little reluctant to over push ideas to other investors,
But with most O&G shares pulling back for the time being BISI performance starting to stand out.Interims in August may be a good time to get the word out more widely.

[tim000] 26/6/2022 07:43

Hope so too, but I can wait for the inevitable. As I say, the Vunani partnership might have tremendous potential, if the BEE people are dynamic, energetic go-getters with political connections. I suspect it is just lack of information that stops very clever O&G investors from dabbling in coal. You might help to educate them, e43!

[e43] 26/6/2022 07:29

Tim,it is v strange why many/most O&G investors don't seem to have any exposure to coal.
As mentioned before there does seem an incredible bias against it or just plain lack of knowledge by many investors .
Many investors will have looked and thought they've missed the rise,without actually studying the figures i.e TGA/BISI forward p/e multiple's some of the lowest of any listed company.
Hoping last weeks BISI rise looks similar to when TGA broke out of the £4-6 range earlier this year.

[tim000] 26/6/2022 05:42

e43, we have common O&G investments, but I don't post on O&G threads cos I have little to contribute relative to the local experts there. I'm curious though why seemingly none of those experts inhabit the coal threads and invest in coal stocks. Coal is O&G on steroids, just compare recent price inflation. An oversight imho.

[tim000] 26/6/2022 05:36

This may be of interest. My model forecasts BW revenues rising from £49 mn in 2021 to £105 mn in 2022. Not surprisingly, all of that can be accounted for by the hike in the benchmark coal price. An assumed increase in the BISI % price discount this year (more than fully reflecting highly discounted domestic prices) reduces revenues by about £7 mn. But that is fully offset by £'s depreciation against the US$. Having coal exports priced in US$ is a boon to BISI, at a time of geopolitical and macro-economic uncertainty, with a consequent flight by investors into dollars.

[tim000] 26/6/2022 04:19

e43, you might take an occasional look at the Twitter account of coaltracker, I’m confident I know who the author is and he knows a lot about coal. One of his posts documents the extent of coal power plant construction, principally in the Far East. Nearly all Far Eastern nations have no qualms about using Russian coal, but the EU needs South African coal, it doesn’t have many other options. If the EU has any intelligence (which I admit is a fanciful idea), it might finance a few locomotives for South Africa’s Transnet. Any such investment will be paying back for decades to come.

[tim000] 26/6/2022 04:08

e43, congratulations to you on holding TGA, a great investment! I’m hopeful for we BISI shareholders, and it’s good that our investments are already backed by quite a lot of cash. But nothing is certain. However, the EU would be mad to backtrack on Russia, and due to its climate change obsession, it has discouraged any investment in new sources of fossil fuels. The madman Mark Carney was very keen at preaching to institutional investors not to touch fossil fuels, we now have to live with the consequences….one of which is resurgent nationalism and empire building in Russia and China.

[tim000] 26/6/2022 03:59

If I recall correctly, the seller of the coal reserves is entitled to an offtake agreement, which no doubt could be very profitable. I imagine that, for the seller, the coal was a stranded asset (ie without access to plant and machinery to mine the coal). Looking backwards, I think BISI’s coal business has depended on its Sisonke processing operations to make money. So until very recently, one could argue that mining rights had very little value. My own view is that Russia has changed that fundamentally, and that the EU has had to confront the fact that its ideological commitment to globalisation (and dependency on Russia and China for most of its basic commodities) was a dreadful mistake. Not as if it hadn’t been told so, but its leaders are not very bright.