Wednesday, September 4, 2013


Geo Energy
Fair value na
add: 12m dividend forecast na
versus: Current price S$0.360

• Now a mine owner
• Adding five more concessions
• 15x PER vs. peers’ 36x

Geo Energy Group
Geo Energy Group (GEG) is a coal mining specialist in Indonesia, which started as a mining contractor, and has since moved on to become a mine owner. It currently owns the BEK Mining Concession (which we visited recently) and has entered into five other mining concessions.

Visit to BEK site
Located on a 4570ha site in Kutai Barat Regency, East Kalimantan, BEK has a 6-year mine life based on 12.5m tonnes of reserves (also has 30.7m tonnes of resources and a 20-year concession from Apr 2011). We understand that GEG has produced some 1.84m tonnes of coal from this site as of 30 Jun; and the company believes it is on track to achieve its 2m-tonne target by year end. While the caloric value is just above 3400 GAR, we understand that prices have been holding up pretty well (~US$31-34/ton) despite the slide in Newcastle coal prices; this as end customers switch down to cheaper inputs in wake of the still-sluggish economies in China and India.

Also went to BJPE site
We also visited a 739.9ha site where GEG provides mining services to the owner of the concession, BJPE. In addition, GEG has exclusive marketing rights over the semi-coking and high-thermal coal produced there. According to management, GEG will continue to secure new mining services contracts like this. And it believes that it has an edge over its competitors as GEG owns its own equipment, thus giving the company greater flexibility and cost control.

Outlook for Indonesian coal remains upbeat
Going forward, GEG remains upbeat about its prospects, noting strong demand from countries like China and India, even though near-term coal prices are likely to remain relatively soft due to the supply growth. We do not have a rating on GEG. Currently, GEG is trading at a historical PER of 15x versus the simple average of 36x of its peers in Indonesia.

About Geo Energy Group
Geo Energy Resources Limited is a mining group operating in Indonesia. It was established in 2008 and was listed on SGX on 10 Oct 2012. Geo Energy Group is headquartered in Jakarta, Indonesia with its corporate office in Singapore and production operations in East Kalimantan, Indonesia.

Geo Energy Group is a mine owner cum operator and it undertakes all the activities in the mining process through its subsidiary PT Bumi Enggang Khatulistiwa (BEK), the Mining Business License (IUP) owner of a 4,570 hectare coal mining concession area in Kutai Barat, East Kalimantan. The coal in the concessions area is sub-bituminous with the properties of low ash and low sulphur contents and will be produced for both the domestic and export markets. Geo Energy Group is also a mine contractor, having recently secured mining services contracts as well as coal sales and purchase contracts for two mining concessions in East Kalimantan.

The executive chairman Charles Antonny Melati is one of the founders of the group. He oversees the overall strategic direction and expansions plan. Prior to this, he was an entrepreneur in the property development and hotel industry from 1991 to 2006. From 2006 to 2008, he was involved in the setting up of PT Trivesta Polymas Perkasa, which manufactures cast polypropylene for flexible food packaging in Jakarta, Indonesia. From 2004 to 2010, he was involved in the setting up and operations of a tug and barge business in Singapore and Indonesia.

Mr Dhamma Surya is the CEO of the group and also one of the founders. He is responsible for the overall business and general management of the group. Prior to his appointment, he was an entrepreneur in the property development and construction industry in Indonesia. Between 1990 and 2002, he ran a contractor cum household maintenance services in Dumai. Thereafter, between 2003 and 2006, he worked with various business associates in construction and developing shophouses and houses in Pekanbaru, Riau Province.

Mr Tan Cheang Shiong is the CFO of the group, which is responsible for overseeing the financial and accounting management and reporting. Prior to his appointment, Mr Tan Cheang Shiong was the assistant controller of Honeywell Pte Ltd from 2007-2011. He has obtained professional qualification from the Association of Chartered Certified Accountants in 2002 and is also a member of the Institute of Certified Public Accountants of Singapore.

Mr Darmin is the Head of Operations. He oversees business operations, including the mining and port loading operations.

As of Dec 2012, Mr James Beeland Rogers Jr (Jim Rogers) was appointed as Non-Executive Director of the company.

Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 03/09/13

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