Bisichi Share Discussion Threads

[tim000] 23/3/2022 08:20

Still hard to say, without sales volumes and domestic prices. But I guess BISI's mining operating profits might be around £10 mn in 2021. That compares with minus £4 mn in 2020 and minus £1 mn in 2021 H1.

[8gggggggg] 22/3/2022 19:28

Thanks very informative....So what will BISI make ,,,,,,?..?Dakas

[tim000] 22/3/2022 10:42

I've been through the TGA results in great detail. The key takeaways for BISI seem to be that the price discount for export sales (relative to the AP14 Benchmark) declined sharply, from 23% in H1 to 12% in H2 (annual average 16.3%), no doubt reflecting the pick-up in global demand in H2. And TGA's cost of sales were broadly flat in ZAR terms between the first and second halves of the year, although unit cost of sales increased sharply due to lower production and domestic sales in H2. On the back of these numbers, I've slightly increased my forecast for BISI's mining operational profits in 2021. According to TGA, AP14 Benchmark prices increased from US$97.7 per tonne in H1 to US$150 in H2.

[tim000] 22/3/2022 08:05

e43, yes, lots of good data in the TGA AR. It will take me a while to work out the implications for BISI.

[talk2dubya] 21/3/2022 22:33

hxxps://oilprice.com/Latest-Energy-News/World-News/Coal-Prices-In-India-Soar-As-Buyers-Race-To-Procure-Fuel.amp.html

[e43] 19/3/2022 14:37

Interesting week coming up with TGA reporting H2 figure's next week(22nd),if well received by market , should create a little extra interest here too.

[tim000] 19/3/2022 09:57

Based on AP14 daily published data, it looks as if the 2022 Q1 average AP14 coal price is going to be about $250 per tonne, ie another $100 on the 2021 H2 average.

[tim000] 19/3/2022 09:52

BISI only give inventory figures (at end-June and end-Dec) expressed in £mn, not in volumes. However, it is possible to estimate volume figures by deflating the £mn figures by unit costs of coal production. From this I estimate that BISI ran down inventory volumes by about 47k tonnes in 2021 H1, adding to sales relative to production. Hopefully they will have run down inventories further in 2021 H2, taking advantage of the higher prices. MCM reported that AP14 Benchmark prices were $151 per tonne in H2, compared with $97 in H1.

[talk2dubya] 17/3/2022 12:21

Looks like Standard Bank Group, Asset Management Arm increased this year.

API14 FOB is the price to look at

[coolen] 13/3/2022 23:50

In addition to Andrew Perloff, I recall the ex-Phillips & Drew property guru building up a holding in LAS at prices higher than today's. His name escapes me.

[tim000] 13/3/2022 17:08

Thanks e43. It’s fairly clear from all that I read about BISI and LAS that they are treated as the property of the Heller family. There’s a This Is Money article about a shareholder rebellion a few years ago, spearheaded by the respected significant LAS shareholder and CEO of Panther Securities Andrew Perloff, but which got nowhere. I’ve emailed the company, but it seems I might not get a reply! Despite all that, BISI is possibly the most undervalued listed coal miner anywhere on the planet (and I have holdings in several Aussie listed gems).

[e43] 13/3/2022 15:50

Tim,I put a call into the company last autumn regarding coal pricing,the receptionist said a Director would call back.When no call came I rang back and was told 'they couldn't find my name on the share registar'.(even though I'd mentioned previously that my decent size holding was held in a nominee acc)And that was that.Clearly minority shareholders not their most pressing concern.
I think and hope you've timed your purchase v well.

[tim000] 13/3/2022 08:23

One other point. The infrequent BISI operations reports, and lack of detail within them, is not helpful. Has anyone questioned the company about this? For example, there is nothing in the interims that I can see about coal sales. It says inventory was reduced in 2021 H1, but not to what extent. And nothing on the split between domestic and export sales either. Very hard to guess profitability as a result, though obviously booming.

[tim000] 13/3/2022 08:17

I too bought some LAS on Friday for risk diversification purposes. However, it appears from the LAS accounts that its BISI holding is not valued at market prices. Hence the only benefit LAS appears to get (wrt the P/L account) from the current boom in BISI profitability is an assumed jump in dividend income. Hence I think direct purchases of BISI shares is the way to go.

[tim000] 13/3/2022 08:09

I bought in heavily on Friday. This is surely the cheapest listed coal miner anywhere in the world. Prices of thermal and metallurgical coal are unlikely to fall back to 2020 levels anytime soon. But working out the likely profitability of BISI is incredibly hard, given no transparency on the current discount to international coal prices for domestic sales. I imagine the percentage discount increases as the coal price rises, but hard to know to what extent. And I can’t find any data for other South African coal miners. I have a query, which experts here might know the answer to. AP14 futures prices are currently about $370 per tonne from memory. But Richards Bay spot export prices (published for example in the World Bank Pink Sheets) are only about $200 per tonne. Why the discrepancy, and which is the more accurate indicator of pricing for BISI exports?

[callumross] 11/3/2022 09:06

Thanks for your research Tiger. When you see what has happened to TGA in the last few months it is amazing that BISI hasn't yet followed suit, albeit TGA export more. I will probably top up on some LAS as a cheap way into BISI as that hasn't yet moved.

[tigerbythetail] 11/3/2022 08:55

There is an interesting series of posts on the LSE board where they calculate the average discount to the Richard's Bay export price that Bisichi actually sell their coal at.
It comes out at about 33%, which is a little more than I worked out (I had 26%). I'm hoping they have reduced this discount recently by managing to export more coal (thanks to their BEE partner) and selling less inside South Africa, but that's to see.
Any road, if you look at the interims, Bisichi basically broke even on $97/t benchmark price, even allowing for the fact that production was down at 553,000 tonnes. Benchmark price for the 6 months July to December 2021 was around $140/t, and production was guided to be the same again. That should equate to roughly $16m in "extra" revenues for H2 over H1 with all direct mining costs already accounted for.
Figures for the current quarter will be even better than this, since the coal price has rocketed into the stratosphere. They could be making their market cap in profit every couple of months at current prices.
Crazy situation!

[bisiboy] 10/3/2022 18:05

As a very long term holder i am quite excited in the run up to results
Assuming no disasters leakage various connected groups and bonuses I agree that profits could exceed current market

[tigerbythetail] 10/3/2022 16:09

Hi Bozzy!
The market is so volatile they may not be able to hedge (no counterparties; also huge risk of margin calls if price rockets even higher).
But, UNLESS they have an undeclared production disaster, how can they not be making very good money at the current prices? The market cap here is tiny, and debts aren't huge either. They should be trading on a "current P/E" of way less than 1!

[callumross] 10/3/2022 15:45

Weird backwardation. You can buy for £1.1694 and sell for £1.175!

[bozzy_s] 09/3/2022 00:08

In a few hours it's jumped to $460 TBTT :)

Surely BISI is making a few quid? Even if exports are just a fraction of their overall production, and they have to supply domestically at a heavy discount.

And for their huge salaries I trust the directors are hedging future sales. That could ensure BISI has cash at the end of 2023 well above today's market cap.

The dividend payments were on an upwards trajectory before Covid-19. Let's hope that continues from this year. 7p for starters?

[tigerbythetail] 08/3/2022 13:20

Richard's Bay current contract price - $422/t.
Futures are over $200/t all the way out to June 2023.

[tigerbythetail] 04/3/2022 08:18

Hi Bozzy!
Also they should be reporting to the market in a more regular and professional manner. Quarterly trading updates, at a minimum.
And also divesting of the non-core London property assets.
But, this is idle talk. We all know what SHOULD happen here. But it won't. The directors have this company in a death grip.
But, even that said, the shares are worth more than the current price.