External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

Equity Bottom-Up

<ul><li>Peabody is a global coal company operating in the US and Australia, offering exposure to both thermal and metallurgical coals</li><li>Despite recent success and a positive recommendation, the stock has lagged behind other coal companies</li><li>With a current share price of $23.40, market cap of $2.9bn, and strong FCF yield of around 30%, Peabody presents a promising risk/reward opportunity in the current market environment</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Peabody is a global coal company operating in the US and Australia, offering exposure to both thermal and metallurgical coalsDespite recent success and a positive recommendation, the stock has lagged behind other coal companiesWith a current share price of $23.40, market cap of $2.9bn, and strong FCF yield of around 30%, Peabody presents a promising risk/reward opportunity in the current market environmentThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Peabody Energy Corp (BTU) - Thursday, Jul 4, 2024

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

It has been almost two years since we last wrote about <a href="https://www.smartkarma.com/entities/geo-energy-resources-ltd" target="_blank" data-smartkarma-citation="entities:8717:1" rel="noopener">Geo Energy Resources (GERL SP)</a>. Our last insight can be found here <a href="https://www.smartkarma.com/insights/geo-energy-gerl-sp-distressed-bonds-and-share-price-versus-optimistic-management-who-is-right" target="_blank" data-smartkarma-citation="insights:34887" rel="noopener">Geo Energy (GERL SP): Distressed Bonds and Share Price Versus Optimistic Management; Who Is Right?</a> How things have changed!Back in late 2019, the coal price was hovering between 20-30 USD, Macquarie had bought 5% of the company for 0.29 SGD/share in November 2018 and Geo was generating losses as the coal price was below its cost of production. Entering 4Q21 the coal price is at stratospheric highs (117 USD for October 2021 delivery) and Geo is earning record profits.In a public disclosure, the company announced it made 26.5M USD in EBITDA in July 2021 alone. This was with coal prices around +/-50 USD/ton. Today coal prices are well over 100 USD. We estimate at current prices Geo is making at least 45M-50M USD in EBITDA every month! Compare this to the market cap of 320M USD currently. In 2H EBITDA at current market prices could total +/- 225M USD alone. 1H2021 EBITDA was 78M USD. Recall, Geo has no debt and 60M USD in cash.Mr. Market is slowly waking up to this reality pushing the stock up over 70% YTD (most of the gain came in the last few trading sessions). Many Indonesian-listed peers such as <a href="https://www.smartkarma.com/entities/adaro-energy-tbk-pt" target="_blank" data-smartkarma-citation="entities:6061:1" rel="noopener">Adaro Energy (ADRO IJ)</a>, <a href="https://www.smartkarma.com/entities/tambang-batubara-bukit-asam" target="_blank" data-smartkarma-citation="entities:1189:1" rel="noopener">Tambang Batubara Bukit Asam (PTBA IJ)</a>, and coal contractor <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> have also underperformed vs the underlying commodity.  However, this is not true of US-listed peers such as <a href="https://www.smartkarma.com/entities/consol-energy-inc-61c2f282-fc00-497d-9066-606d78f6fe82" target="_blank" data-smartkarma-citation="entities:26245:1" rel="noopener">Consol Energy (CEIX US)</a> and <a href="https://www.smartkarma.com/entities/peabody-energy-corp" target="_blank" data-smartkarma-citation="entities:6430:1" rel="noopener">Peabody Energy (BTU US)</a> which are up 345% and 606% respectively YTD.We expect a 4Q21 catch-up trade-in Indonesian-related coal names that could be violent. While prices will surely cool off in 2022 they might not drop all the way below the cost of production once again. Geo has a 30% dividend policy so investors are sure to see massive dividends (est. 18% div yield) come March 2022. Board member Jim Rogers should hopefully make sure the cash is not squandered on doing an expensive M&amp;A deal but is returned to shareholders.

It has been almost two years since we last wrote about Geo Energy Resources (GERL SP). Our last insight can be found here Geo Energy (GERL SP): Distressed Bonds and Share Price Versus Optimistic Management; Who Is Right? How things have changed!Back in late 2019, the coal price was hovering between 20-30 USD, Macquarie had bought 5% of the company for 0.29 SGD/share in November 2018 and Geo was generating losses as the coal price was below its cost of production. Entering 4Q21 the coal price is at stratospheric highs (117 USD for October 2021 delivery) and Geo is earning record profits.In a public disclosure, the company announced it made 26.5M USD in EBITDA in July 2021 alone. This was with coal prices around +/-50 USD/ton. Today coal prices are well over 100 USD. We estimate at current prices Geo is making at least 45M-50M USD in EBITDA every month! Compare this to the market cap of 320M USD currently. In 2H EBITDA at current market prices could total +/- 225M USD alone. 1H2021 EBITDA was 78M USD. Recall, Geo has no debt and 60M USD in cash.Mr. Market is slowly waking up to this reality pushing the stock up over 70% YTD (most of the gain came in the last few trading sessions). Many Indonesian-listed peers such as Adaro Energy (ADRO IJ), Tambang Batubara Bukit Asam (PTBA IJ), and coal contractor United Tractors (UNTR IJ) have also underperformed vs the underlying commodity.  However, this is not true of US-listed peers such as Consol Energy (CEIX US) and Peabody Energy (BTU US) which are up 345% and 606% respectively YTD.We expect a 4Q21 catch-up trade-in Indonesian-related coal names that could be violent. While prices will surely cool off in 2022 they might not drop all the way below the cost of production once again. Geo has a 30% dividend policy so investors are sure to see massive dividends (est. 18% div yield) come March 2022. Board member Jim Rogers should hopefully make sure the cash is not squandered on doing an expensive M&amp;A deal but is returned to shareholders.

Geo Energy: Indonesian Coal Market Beneficiary Trading at Distressed Multiple

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares Russell 2000 ETF / Technical Analysis

<ul>
<li>We continue to see the current environment as a bear market rally with the potential for it turn into something more following bullish breadth thrust signals.</li>
<li>The SPX and NDX have been treading water for a week (bull flags?), but the Russell 2000, DAX, Hang Seng, MSCI China (MCHI), and KWEB have continued to move higher.</li>
<li>We are also seeing major bullish reversals on Europe's STOXX 50 and Japan's Nikkei 225, topside 6- and 9-month downtrends, respectively. These are far from bearish signs.</li>
</ul>


We continue to see the current environment as a bear market rally with the potential for it turn into something more following bullish breadth thrust signals.
The SPX and NDX have been treading water for a week (bull flags?), but the Russell 2000, DAX, Hang Seng, MSCI China (MCHI), and KWEB have continued to move higher.
We are also seeing major bullish reversals on Europe's STOXX 50 and Japan's Nikkei 225, topside 6- and 9-month downtrends, respectively. These are far from bearish signs.


Small-Caps Starting to Lead; Short-Term Flag Patterns on Major Indexes; Ideas in Energy & Materials

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a>’s independent board committee unanimously concluded that <a href="https://www.smartkarma.com/entities/yankuang-energy-group" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yankuang Energy Group (1171 HK)</a>’s H-Share CBs offer is not in the best interests of Yancoal’s minority shareholders. </li>
<li>Yankuang is open to continuing its discussions with <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a> but maintains that the offer was based on long-term factors including expectations of future coal prices.</li>
<li>Overall, the wording of Yankuang’s response suggests that it is more inclined to bide its time rather than return with a better offer. Required FIRB approval remains an overhang.</li>
</ul>



Yancoal Australia (YAL AU)’s independent board committee unanimously concluded that Yankuang Energy Group (1171 HK)’s H-Share CBs offer is not in the best interests of Yancoal’s minority shareholders. 
Yankuang is open to continuing its discussions with Yancoal Australia (3668 HK) but maintains that the offer was based on long-term factors including expectations of future coal prices.
Overall, the wording of Yankuang’s response suggests that it is more inclined to bide its time rather than return with a better offer. Required FIRB approval remains an overhang.


Yankuang’s Response Suggests that It Rather Wait than Improve Its Offer for Yancoal

<ul>
<li>
<a href="https://www.smartkarma.com/entities/glencore-plc" target="_blank" data-smartkarma-citation="entities:764:1" rel="noopener">Glencore Plc (GLEN LN)</a> is likely to reject <a href="https://www.smartkarma.com/entities/yanzhou-coal-mining-company-limited-h" target="_blank" data-smartkarma-citation="entities:384:1" rel="noopener">Yanzhou Coal Mining Company Limited H (1171 HK)</a>’s H-Share CBs of US$3.60 (HK$28.26/A$5.07) per <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a> share, <a href="https://www.reuters.com/markets/europe/glencore-reject-offer-yancoal-australia-stake-too-low-sources-2022-06-02/" target="_blank" rel="noopener">according to Reuters</a>.</li>
<li>If the privatisation succeeds, we estimate that Yankuang’s additional claim on <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a>’s three-year FCF would broadly cover the total potential consideration of US$1,794 million.</li>
<li>The fixed coupon on the CBs would likely need to match the foregone dividend yield. We think it challenging for Yankuang to bridge the gap to Glencore’s “right price”. </li>
</ul>



Glencore Plc (GLEN LN) is likely to reject Yanzhou Coal Mining Company Limited H (1171 HK)’s H-Share CBs of US$3.60 (HK$28.26/A$5.07) per Yancoal Australia (YAL AU) share, according to Reuters.
If the privatisation succeeds, we estimate that Yankuang’s additional claim on Yancoal Australia (3668 HK)’s three-year FCF would broadly cover the total potential consideration of US$1,794 million.
The fixed coupon on the CBs would likely need to match the foregone dividend yield. We think it challenging for Yankuang to bridge the gap to Glencore’s “right price”. 


Glencore and Yankuang’s Disparate Valuations of Yancoal

United States

Peabody Energy Corporation mines and markets low sulfur coal, primarily for use by electric utilities. The Company also trades coal and emission allowances. Peabody owns and operates mines in Arizona, Colorado, New Mexico and Wyoming, Illinois, Indiana, and Australia.

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Peabody Energy (BTU US)

Peabody Energy Corp (BTU) - Thursday, Jul 4, 2024

Peabody is a global coal company operating in the US and Australia, offering exposure to both thermal and metallurgical coals

Value Investors Club

Geo Energy: Indonesian Coal Market Beneficiary Trading at Distressed Multiple

GEO has run 70% YTD but has lagged US-listed coal peers such as Consol and Peabody which are up respectively 345% and 606% YTD. We expect a violent...

Nicolas Van Broekhoven

Small-Caps Starting to Lead; Short-Term Flag Patterns on Major Indexes; Ideas in Energy & Materials

We still see this as a bear market rally with the potential for it turn into something more following bullish breadth thrust signals in recent...

Vermilion Research

Yankuang’s Response Suggests that It Rather Wait than Improve Its Offer for Yancoal

Yancoal unsurprisingly batted away Yankuang's low-ball offer. The wording in Yankuang's response suggests that it is unlikely to offer improved...

Arun George

Glencore and Yankuang’s Disparate Valuations of Yancoal

Glencore is likely to reject Yankuang’s offer, according to Reuters. While Glencore is said to be a willing seller, we think that Yankuang will...

Arun George

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