Geo Energy Reports Net Profit of US\$7.0M for 3Q2024 and Declares Dividend

Business Description

Geo Energy Resources Limited is a major Indonesian coal producer, focusing on low-cost production of strategically-located premium coal assets. Established in 2008, the company operates coal mines and sells coal throughout the region. Geo Energy owns five mining concessions in Kalimantan and South Sumatra, Indonesia, and holds a 49% equity stake in PT Internasional Prima Coal in Kalimantan. Additionally, the company has a 58.70% interest in PT Marga Bara Jaya, an infrastructure company developing a significant Integrated Infrastructure project.

Industry Position and Market Share

Geo Energy is positioned as a significant player in the Indonesian coal industry. Its competitors include other major coal producers in Indonesia, such as PT Bukit Asam Tbk. The company focuses on low ash, low sulfur coal, catering to both domestic and international markets, with a strategy to increase production and diversify its sources of coal.

Revenue Streams and Customer Base

The company’s revenue streams primarily come from coal sales. In 3Q2024, Geo Energy reported coal sales of 1.7 million tonnes. The customer base includes major markets like China and India, driven by their growing power demand. The company is enhancing its supply chain through the development of Integrated Infrastructure, aiming to scale up production and achieve logistical cost efficiency.

Financial Statement Analysis

Income Statement

Geo Energy reported a net profit of US\$7.0M for 3Q2024, a significant point of interest for investors. The cash profit per tonne from coal mining increased to US\$12.04 per tonne, demonstrating improved efficiency and profitability.

Balance Sheet

The company’s financial stability is supported by its ongoing development projects and strategic investments. The Integrated Infrastructure project is expected to scale up production capacity and contribute to long-term growth.

Cash Flow Statement

Geo Energy’s cash flow is positively impacted by its operational efficiency and increased cash profit margin, which stands at 24.4% for 3Q2024.

Important Information for Investors

The company declared a third interim dividend of 0.2 SG cent per share for 3Q2024. Together with the dividends declared and paid for 1H2024, the total dividend for the first nine months of 2024 is 0.6 SG cent per share. Geo Energy remains committed to its dividend policy and will assess the full-year performance before declaring the final dividend.

Special Initiatives

The development of the Integrated Infrastructure (hauling road and jetty) has commenced, aiming to enhance production capacity and logistical efficiency. This project is expected to complete by early 2026, enabling the company to ramp up coal production to 25 million tonnes per annum and realize cost savings over US\$10 per tonne.

Investment Recommendations

For Current Investors

Current investors should consider holding onto their stock. The company’s improved profitability, strategic infrastructure developments, and commitment to shareholder returns through dividends provide compelling reasons to maintain the investment.

For Potential Investors

Potential investors may find Geo Energy an attractive investment opportunity due to its strategic initiatives aimed at long-term growth and profitability. The ongoing development projects and increased production capacity align with the company’s vision to become a billion-dollar energy group.

Disclaimer

The recommendations provided are based on the current financial report and strategic initiatives of Geo Energy Resources Limited. Investors are advised to conduct their own research and consider their financial situation before making any investment decisions.

Report Date: 12 November 2024