Bisichi Share Discussion Threads

[rimau1] 09/8/2022 12:30

A factor will also have been the EU import ban of Russian coal from this month. Germany in particular stock piled and brought forward purchases of Russian coal into H1. With Russian coal deeply discounted and heading to China and India the EU needs to try to plug the gap plus source extra coal to plug the gas energy shortfall yet South America and South Africa have supply constraints so i don’t see the price of coal softening too far. Tempted to top up here pre results.

[andydaf] 09/8/2022 11:53

As for the coal market i believe coal india has had a good year for production and i also believe the low water on the rhine is leading europe to delay purchases due to logistical problems .I can see some weakness in august due to low volumes but as the winter dawns on the west i expect the coal price to firm.Bisi produce high quality steam coal and looking at prices for6000kcal coal the richards bay price is a lot closer to the newcastle price.I do not know the kcal content of Bisi export coal but it is worth bearing in mind.GLA

[andydaf] 09/8/2022 11:40

A certain aged citizen of the usa who is certainly smarter than me is busy buying up oxy shares at a rate of knots.Traditional energy companies will not invest in capex due to esg/confused goverment messages etc.Biden promised to make fossil fuels history now he is begging for more oil,crawling to a saudi regime he called a pariah state.With no capex oil/gas/coal companies are left with only two choices,return the money to shareholders or diversify into other industries.With Bisi we can have a bit of both.I have not had a university education but i do know that when things are in short supply prices do not collapse.Panic will set in around october and the west will pay any price to avoid load shedding and oil rationing.There is no new capacity coming on line and due to politics the west is now deprived of russian resources forever.Thats my thesis but as i have said everyone needs to make their own opinions.Fwiw i am long oil/gas/coal and copper but over a ten year timeframe.GLA

[tim000] 09/8/2022 06:16

Good post Andy, fully agree.

Futures markets are currently pricing RBCT coal at the same average level in 2022 H2 as the outturn in H1. So BISI's H1 figures should provide a reasonable guess for H2 too.

[andydaf] 09/8/2022 05:11

Last time i looked RCB coal price was circa 280.At that price Bisi is a slot machine paying out jackpot after jackpot.You have to look beyond short term price movements and form an opinion on long term trends.I am of the camp that believes the world due to ESG is short of energy and will be for the next 10years.Other people think price will destroy demand,that may be true short term but that means the west is prepared to enter depressions every time oil reaches 100 or coal reaches 300.Remenber the energy transition is being managed by people who it seems to me cannot add up and could not manage their way out of a cardboard box.Not long to wait now for the interims and for what i hope is the start of hefty dividends.Everyone shuld form their own opinions but i remain confident i will receive my capital back from Bisi in dividends over the next few years.As always GLA and DYOR

[tim000] 07/8/2022 18:15

I guess the Germans are stockpiling at the moment in order to have maximum stocks going into year end. So this is possibly just a timing issue for German demand.

API-4 futures softened last week, but whether that has any significance for prices this winter and beyond is doubtful. I’ve heard before that actual transaction prices often have no relationship to the illiquid paper markets.

[e43] 07/8/2022 18:08

Coalhub. comments in its world coal overview,that Transnet says it's about to increase tonnage to RCBay by a few hundred K tonnes per week.
Slight negative ,low water levels in the Rhine making it difficult for the Germans to get the coal to where it's needed.

[tim000] 04/8/2022 08:51

I calculate unit production costs rather crudely by applying total costs to domestic sales and exports proportionate to sales volumes. On this basis, domestic sales are usually loss making. But my method might not be consistent with what the company does. For example, BISI mines coal, which produces a range of coal products with different calorific values selling into different markets. Marginal costs for some of the products might effectively be almost zero, and any sales revenues are better than none. Saying those domestic sales are loss making would not be accurate, as the coal is a by-product of producing high-value export steam coal. My guess is therefore that domestic sales will continue to appear loss making this year.

[tim000] 04/8/2022 08:42

Andy, I’ve been reading up on Eskom, who pay very little for their coal. South32 recently sold a mine to a BEE group, but before the deal completed Eskom had to agree to higher prices as S32 were losing money supplying them. What I don’t know is what proportion of BISI’s domestic sales is to Eskom; I believe BISI also supply South Africa’s industrial sector too, including ferrochrome production.

[andydaf] 04/8/2022 07:42

It will be interesting to see how much Bisi have made in the first half.Much is unknown to us and as i have highlighted before quite a lot depends on the domestic market.If Bisi has managed to make just 10 dollars a ton on the domestic market it will be a major plus.Looking at LAS i see they have sold their west bromwich shopping mall for circa 4.75million.Will Bisi help them out and buy a million or so shares off them and issue a dividend of circa 4million so they can pay their Aviva debenture?From LAS annual report i see they can roll the other loan into 2023.As always nothing is ever certain but reading Glens interims they are also expecting energy to remain at strong prices for the rest of the year.Looking forward to the half year report,I am more bullish than Tim but from the wording of the profit warning i would think its safe to assume profit for the half should be at least 10million.As always GLA

[tim000] 04/8/2022 06:49

In the AR21, BISI reported a good start to 2022, with API-4 averaging US$238/t in Q1, compared with US$125/t in 2021. GLEN's figures imply a Q2 outturn of US$316/t.

[tim000] 04/8/2022 06:38

GLEN's Report was useful, they have a table of commodity price outturns in H1, including the SA API-4 benchmark. API-4 averaged US$277/t in H1, about US$13/t higher than indicated by World Bank data (and hence upside news for my model). Following BISI's profit warning announced 6 June, spot coal prices were likely higher than BISI had expected in June: GLEN reports API-4 ended June at US$353/t. BISI's earnings in the summer most likely have continued to spiral upwards.

[e43] 03/8/2022 13:00

It will be worth having a look at Glencore's half year results 2mow as they have a massive thermal coal division,expect the coal to have made them 7-8billion$ profit for the six months on 50m+ tonnes sales.

[tim000] 01/8/2022 16:41

The good thing is that the CEO and FD want a high share price to sell their options into. I get the impression they will take shareholder relations much more seriously in future, and might even do some promotional stuff! I imagine a hefty tax liability on their options won’t be due until January 2024, so they have no rush to sell. Still, they’ll want to start the IR groundwork soon.

[tim000] 01/8/2022 16:21

My family bought another 78500 LAS today too, Andy. Good value.

[tim000] 01/8/2022 16:12

If West Ealing is developed in-house, LAS will need funding for their share of the project. One possibility is that they sell say 1 million of their BISI shares back to BISI, who we think will have surplus capital and would probably welcome the chance to reduce the share capital. All should be revealed in about four weeks.

[tim000] 01/8/2022 16:01

I’m thinking about buying shares in ARCH.NYSE, a US based met and thermal coal miner. They’ve just released their Q2 results, and have announced a quarterly dividend of about 5% of the share price. Playing the audio for the results presentation, the management draw attention to the unheard of premium for thermal over met coal, and how they plan to exploit this by selling met coal into the European power market. This switching should ultimately rebalance both markets, increasing supply of thermal and reducing supply of met coal. However, there is a major problem slowing this rebalancing: the US train service is disfunctional and ARCH can’t get the coal to port! So it’s not only SA that suffers this problem. Poor logistics are preventing miners supplying the European thermal market, meaning thermal prices should stay high for longer.

[rimau1] 01/8/2022 06:35

TGA have just upgraded half year expected results mainly due to higher coal prices. EPS c.15% higher than expected. Trades on 2x earnings even after the jump in share price this summer. Bodes well for BISI!

[e43] 30/7/2022 11:39

That loan and refinancing for Transnet is good news,just hope they have the quality of personnel and management to make things work better, certainly in Germany's interest that it does too.
SA 's lost 20m T per annum of exports is hugely costly for everyone at present.

[tim000] 30/7/2022 10:25

Interesting too that Deutsche Bank is the lead lender. Coincidence that Germany faces the worst energy crisis in Europe?

[tim000] 30/7/2022 10:22

Why would Transnet borrow US$1.5 bn if the SA government had decided to abandon coal for green energy? And why would SA coal miners want to export more long term unless the coal price was forecast to stay high for longer? This loan is strong evidence that my hypothesis of a 5-year plan for SA exporting more coal is correct.

[tim000] 30/7/2022 10:14

I agree Andy on coal prices. Building new energy infrastructure in Europe, largely wind and solar, not nuclear, will take many years. In the meantime, Europe has to replace Russian oil, gas and coal. But existing supplies from energy exporters such as Australia are already committed to the Far East market; there is very little slack in the system. I think a lot of effort is going to be put into improving Transnet's capacity to get coal to RBCT, so that South African coal miners can bump up exports to European coal-fired power stations. This is a 5-year or so plan; my advice is to forget about short-term volatility in coal prices (spot and futures), and just stick to the investment strategy of being very long coal miners. South African coal miners seem to have the best growth prospects, imho especially well-connected BEE JV minnows such as BISI.

[andydaf] 30/7/2022 08:50

Thanks for that Tim.I am looking for a dividend of at least 30% of the free cashflow.I have a sneaky suspicion that coal is going to stay high enough for long enough for the dividends from Bisi to pay off LAS outstanding loans.They may well between the two companies also be able to afford to do the Ealing developement themselves.I live up north where houses are cheaper but i shudder to think what 55flats and some retail units are worth in london.As always GLA