(GERL SP / RE4.SI)
MBJ live and TRA ramping up from September
Energy
Revenue declined approximately 28% YoY to US$207.1mn as coal sales fell to 3.6Mt from 6.3Mt in 1H25. The decline was driven mainly by lower volume rather than margin compression. Average selling price rose to US$53.88/t and cash profit improved 31% YoY to US$13.30/t, despite production cash cost increasing to US$40.58/t.
Geo Energy’s 92km MBJ integrated hauling road and jetty became operationally live on 16 July 2026, with the first approximately 50,000-tonne coal shipment valued at US$3.2m successfully loaded on the same day. The completion removes a major infrastructure bottleneck for the TRA mine and positions the Group to deliver a significant production ramp-up from September, following the deployment of additional trucks and double trailers.
Management indicated that ResInvest has completed an on-site due diligence visit and discussions have progressed to legal documentation. The proposed transaction is expected to involve ResInvest acquiring a portion of Geo Energy’s existing MBJ shares at the US$1.5bn valuation referenced in the May 2026 term sheet. Completion would provide direct monetisation for Geo Energy and establish an observable third-party valuation for its remaining MBJ interest.
We maintain our OUTPERFORM rating on Geo Energy with a 12-month target price of S$1.15 (previously S$1.27). The reduction in our target price reflects a lower core DCF value following higher forecast borrowings, elevated FY26 investment expenditure and weaker near-term free cash flow.
Key risks include (i) delays to truck and double-trailer deployment; (ii) failure to meet FY26 production guidance; (iii) weaker coal prices; (iv) higher strip ratios and mining costs; (v) delays or non-completion of the ResInvest transaction; (vi) slower third-party MBJ adoption; (vii) changes to Indonesian benchmark pricing or export regulations; and (viii) execution risk relating to the coking-coal project.
