Company Update: Geo Energy Resources Ltd (GERL SP/RE4.SI)
Company Update: 26 March 2025
Resilient performance amid coal market volatility.
- Infrastructure expansion and cost efficiency. Geo Energy’s US$150mn investment in the MBJ Integrated Infrastructure Project is on track for completion by 1H26. The project includes a 92km hauling road and jetty, which will reduce transportation costs by over US$10 per tonne and double production capacity to 25Mt per year. Additionally, third-party leasing of the infrastructure is expected to create additional revenue streams, enhancing long-term cash flow and profitability.
Strategic Growth via Acquisitions and Investments
The acquisition of PT Golden Eagle Energy expands Geo Energy’s reserves and production capacity, securing long-term supply. A US$35mn investment from ResInvest increased its stake to 6.8%, while a US$50mn-US$100mn investment in MBJ infrastructure is expected to further support the company’s long-term expansion plans.
FY24 Financials Update
Navigating price pressures with cost efficiency. Geo Energy reported FY24 revenue of US$401.9mn, a slight decline from FY23 due to lower ICI4 coal prices. Net profit fell to US$37.3mn, but cost efficiencies enabled the company to maintain a strong cash profit per tonne of US$10.37. The company’s focus on operational efficiency and infrastructure development positions it well to capitalize on future demand growth. With a US$118mn cash balance and a net cash position of US$112mn, Geo Energy maintains financial flexibility for future investments. The 1.0 S-cent per share distributable income highlights continued support for dividends and share buybacks, while the repurchase of 4.5 million shares at an average price of S$0.265 per share reinforces management’s confidence in long-term growth.
Valuation & Action
We maintain an OUTPERFORM rating with a target price of S$0.71, based on a discounted cash flow (DCF) valuation using a weighted average cost of capital (WACC) of 11.5%.
Risks
Global coal price volatility, evolving energy landscapes, weather uncertainties, infrastructure project delays and potential execution risks affecting production.
