Company Update: 19 March 2026
Execution-driven inflection amidst current coal upcycle
- FY25 results reflect strong volume-led growth despite pricing and tax headwinds. Geo Energy reported FY25 revenue of US$562.7mn (+40% YoY), driven by a 62% increase in sales volume to 12.8Mt (FY24: 7.9Mt). Profit before tax rose 95% YoY to US$49.1mn, while net profit increased 26% YoY to US$27.5mn, demonstrating the Group’s ability to scale operations and deliver earnings growth despite weaker coal prices and a higher effective tax rate under Indonesia’s HPB-linked framework in 2H25.
2H25 Performance Reflects Margin Compression Amid Weaker Pricings
Revenue declined to US$273.1mn (1H25: US$289.5mn), with net profit at US$7.5mn (vs US$20.1mn), impacted by weaker coal prices and higher HPB-linked taxes. With coal prices recovering into early 2026, we believe 2H25 marked the earnings trough, with pricing recovery and cost efficiencies supporting FY26 earnings. Geo Energy declared 0.55 SG cents DPS and delivered 46% TSR, while maintaining a balanced approach to growth and shareholder returns.
Coal Price Recovery Supported By Energy Security And System Reliability Dynamics
Coal prices have rebounded in early 2026, with Indonesian 5,000 kcal coal at ~US$72/t and higher-grade coal at ~US$135/t, driven by LNG supply disruptions and fuel switching across Asia. Beyond cyclical recovery, coal demand is increasingly underpinned by energy security priorities, system reliability requirements, and policy support mechanisms, providing a more durable demand floor.
Valuation & Action
We maintain our OUTPERFORM rating with a revised target price of S$1.02 (from S$0.76), based on a DCF valuation. The re-rating is driven by recovery in coal prices, improved confidence in earnings and the inclusion of MBJ infrastructure earnings as a core driver, with utilization ramping toward ~50Mt by 2030. The combination of infrastructure-led cost advantages, production scaling, and logistics integration provides a clear pathway for margin expansion and earnings growth into FY26 and beyond, despite incorporating more conservative tax assumptions under the HPB-linked regime.
Risks
Global coal price volatility, Indonesian regulatory changes, evolving energy transition policies, environmental concerns, infrastructure project delays, and execution risks.
