Bisichi Share Discussion Threads

[8gggggggg] 23/12/2021 08:07

Do they have to pay big royalties. .?Dakas

[tigerbythetail] 22/12/2021 13:16

The year is almost up, and the 6 month average Richard's Bay AP14 coal price (for H2) looks like it will be c. $140/t.
This compares with the average $97/t price reported for the same benchmark (for H1) in the interims.
It's not as simple as to say that Bisichi will report extra income of 553,000t of coal x price difference ($140-$97). Firstly, they sell at a discount to the benchmark. Secondly, we don't know about production, potential impact of sales of coal from existing stockpiles, and the effect of transport difficulties. (And yes, a trading update would be greatly appreciated).
However, my fingers and thumbs calculation makes it that revenues will have increased by about $17m, on much the same cost base (n.b. rand has depreciated). That should make a huge difference to this small company's profitability!

[tigerbythetail] 06/12/2021 08:43

Thungela (TGA - the South African spin out of AA's thermal coal mines) has released a pre-close statement this morning - they've amassed 8bn rand ($0.5bn) in cash so far this year, against a market cap of 10bn rand (at opening this morning - rapid rerate now in progress!).
How much can these results be used to read across to Bisi? This is the standard list, and the company only issues the bare minimum of information to the market. It really should release its own trading statement as well, given the very high coal prices. But we may have to wait until March before learning what the financial situation is here. I still think (on balance) the company may report substantially more than its current market cap in cash, but Bisi don't make it easy.

[tigerbythetail] 19/11/2021 09:14

No trades in this share for the last 17 days.
Is this a record?
The South African coal price has come down from its peak, but it is still much stronger than it was in H1. Honestly, it's very hard to make a decent estimate, because there just isn't enough information around, but I assume BIS must be making good money at these prices.

[tigerbythetail] 08/11/2021 13:50

A strange share, this. No trades at all for the last four trading days, and only tiny volumes in general.
But we've now had more than two months of very high coal prices - roughly an average of $170/t compared to $97/t in H1 for the Richard's Bay API4 benchmark.
How this affects Bisichi's bottom line is anybody's guess, but it must be improving the financials overall! A trading update would be very welcome at this point.

[tigerbythetail] 27/10/2021 10:13

Line 5 should read H2 2021 average price, of course...

[tigerbythetail] 27/10/2021 10:12

PRICING OF COAL (AP14 Richard's Bay)
H1 2021 (quoted in interim results) - $97/t
July to Sept 2021 - average price $138/t
October to December 2021 - average price $189/t
H2 2022 - average price $163/t
H1 2022 - average price $135/t

Company's interim results were not great, and they are guiding to similar production for this half (553,000 tons), followed by improved performance next year. At $97/t benchmark price this resulted in EBITDA for H1 2021 of £1.03m.

Given the huge uplift in revenue due from the increased pricing in the current reporting half-year and the next one, and as long as the company doesn't suffer a complete production disaster, I fail to see how this doesn't equate to bonanza profits for BISI.

I know it's not as simple as to say 553,000 tons x ($163-$97=$66) = $36.5m "extra" coal revenues for this half-year alone. And I realise not all of this "extra" revenue will drop straight through to the bottom line. But this company has a mcap of less than £10m and it is not overly weighted down with debts. "Current P/E" must be significantly lower than 1.

At this share price the board should be taking the company private asap. It's the logical move.

[tigerbythetail] 26/10/2021 20:35

Coal (API4) FOB Richards Bay (ARGUS-McCloskey) Futures - Price today $220/t.
Allow for a discount for sales to Eskom. Allow for delays of export coal due to Transnet's problems. Allow for production difficulties. Allow for anything else negative you can think of.

You still come out at current cash generation that is simply ridiculous considering the company's market cap and enterprise value.

Any way you slice it, this company should be trading on "a current P/E" (i.e. based on today's coal price projected forward for a year from today) of substantially less than 1.

[callumross] 26/10/2021 18:48

Domestic coal sales attract a lower price, averaging 450 rand per ton in the last annual report compared to 547 rand per ton for export coal. The other issue is life of mine is now only 4 years and as we can see from the interim report geological problems are arising in extracting the remaining coal, pushing up the costs of extraction, hence why they are trying to acquire further reserves and mine in a different part of Black Wattle. So they made a loss on an average price of 97 dollars per ton (Richards Bay price) in the first half whereas a couple years ago they made 22.5p EPS on similar average coal prices. Add in the rail transportation issues (no point in having sky high prices if you can't export it!) and there is no guarantee that they will even make a profit for the financial year 2021, never mind the sums you are postulating.

[tigerbythetail] 26/10/2021 16:21

Thanks for that. I realised after I posted that BISI had an export quota for only a portion of their coal.
(From the last annual results... "During 2020, management continued to sell coal into both the export and domestic market through our coal processing entity Sisonke Coal Processing (Pty) Ltd. The Group’s export sales were via Richards Bay Coal Terminal and primarily under the Quattro programme, which allows junior black-economic empowerment coal producers direct access to the coal export market via Richards Bay Coal Terminal. We would like to thank Vunani Limited, our black economic empowered shareholders at Black Wattle, for managing and developing this opportunity.")

But even the contract with Eskom (for non-exported coal sales) must be benchmarked against the world coal price in some way, surely? After all, the company are quoting Richard's Bay export market prices in their RNSs and indicating that coal price movements directly affect their profitability.

All in all, this company puzzles me. It issues almost no RNSs except those that are legally required, it seems to seek no publicity, its shares have an incredibly wide spread and trade very thinly, at current coal prices it must be almost crazily profitable, but it flies underneath the radar of almost all investors.

Unique opportunity? Value trap? I can't work it out. But there aren't that many companies around that can make their entire market cap in FCF in a few months! And it's not like BISI is weighed down with huge debts, either.

[callumross] 26/10/2021 15:46

Because the prices you quote are for export. BISI mainly supplies to the domestic electricity producer. They do export some coal but note the problems with the rail line to Richards Bay which Thungela Resources announced last week, resulting in them issuing a profits warning.

[tigerbythetail] 20/10/2021 09:31

I'll try this again, a little more accurately this time...
There are ten months of futures prices available for API4 coal FOB Richard's Bay. These range from $225/t (now) down to $135/t (next summer). The average for the ten months is $180/t.
Let's assume the company forward sells its entire production for that period.
Let us also assume production remains constant at the current slightly depressed rate of 553kt per six months (as was guided by the last RNS). That gives production of 922kt of coal over the 10 month period.
For the last six months (H1 report) coal traded at an average price of $97/t. This resulted in a small EBITDA of £1m.
So, assuming constant costs and production, the increased margin should drop straight through to EBITDA. Which would roughly give an increased EBITDA for the next ten month period of ($180 - $97) x 922,000 = $76.5m. Call that £55m over the ten months for which forward pricing is available.
I realise that EBITDA is not profit, and there are the interests of the BEE partner to account for, and so on.
But how on earth is it possible that this company trades at its current market cap of about £10m???

[tigerbythetail] 19/10/2021 17:19

Well, if you assume that in this half-year they produce 500,000t (that's a lowball number) at a margin of $50 higher than in H1 (an entirely reasonable proposition given current pricing), that's an infusion of an "extra" $25m into the coal side of the business.
Market cap here is only £10m or so. It would be a complete game-changer.

[bisiboy] 19/10/2021 16:06

your not missing much. very illiquid stock so no real interest from professional investors other than a few long term holders.
its one thing to generate the cashflow in the business but another when it comes to
shareholders seeing the colour of the money.

[tigerbythetail] 19/10/2021 13:33

Does anybody understand this share price?
The coal price (FOB Richard's Bay, AP14) is nearing $200/t. And it's much higher in China, currently. (This compares to an average of $97/t in H1).
Surely, all BISI have to do is to maintain current production and costs, and forward sell as much of that production as they can at current market prices? The company would make its entire mcap in profit in a few months.
I understand the mine has a short remaining life (unless extended). But that doesn't really explain the current share price.
What am I missing here?

[talk2dubya] 07/10/2021 19:31

Bisi:

The Group primarily focuses on managing its underlying production costs to mitigate coal price volatility as well as from time to time entering into forward sales contracts with the goal of preserving future revenue streams. The Group has not entered into any such contracts in 2019 and 2020.’

hxxps://bisichi.co.uk/annual-reports/

2021 half year also refers to average for that year and does not reference any forward selling. Might be a smart move to do so now though, they must be absolutely raking it in at the moment.

Not sure what prices they could have sold at from July onwards?

[winnings1] 05/10/2021 18:04

One year high coal prices and BISI's profits will exceed its Market Cap, i.e. PE-ratio at current share price will become below 1. Something is going to haver to move, I reckon it will be the share price.

[bisiboy] 02/10/2021 11:10

lets hope they havent forward sold

[talk2dubya] 01/10/2021 07:35

200 dollars

[talk2dubya] 01/10/2021 07:33

Actually spread was not 20p prior to close. Was still pretty wide though as a result of the liquidity.

Need to bite the bullet if you want in.

[cassini] 01/10/2021 02:43

Spread is 20p!

[bisiboy] 30/9/2021 23:42

It says something when a share which is up 30% on the day attracts such a small number of posts
It is sad but many of us long term holders believe this is not a company run for all shareholders equally

[winnings1] 30/9/2021 11:31

The coal price has risen dramatically off late, witth futures prices currently as high as $190, which is
more than $100 above the prevailing price earlier this year. BISI, producing some 1 million tonnes
of coal per year, is likely to face a bonanze time. Should the very high coal prices persist for some
time to come, and should BISI enjoy prices as high a $180-190 per tonne for a whole year, then
profits would exceed BISI's current market cap. Sounds impossible to come true? Well, with the
prevailing global energy shortages, it is in my view possible to come true. Worth a punt, I would
say.

[talk2dubya] 30/9/2021 10:24

LAS own 46 percent. Market has missed this surge in prices I think is what is happening