Stock Analysis: Geo Energy Res | Lianhe Zaobao
Geo Energy Resources recommends buying, with a target price of 0.59 yuan and a closing price of 0.48 yuan (+3.26%). Due to the use of old transportation routes, the coal supply for the fiscal year 2025 is only 2 million tons, expected to increase to 4 million tons in 2026, reach 12 million tons in 2027, and 16 million tons and 25 million tons in 2028 and 2029, respectively. The construction of new roads is 30% complete, expected to reach 40% by the end of the year, and fully completed by mid-next year. Coal prices remain stable at $42 per ton. Phillip Securities maintains a "Buy" rating
Geo Energy Resources
- Recommendation: Buy
- Target Price: 0.59 CNY
- Closing Price: 0.48 CNY (+3.26%)
Geo Energy Resources' TRA coal mine in South Sumatra is currently using old roads to transport coal, which is why it can only supply about 2 million tons of coal in the fiscal year 2025. After the completion of the new road construction, the supply will increase to 4 million tons in the fiscal year 2026.
With the full operation of the new road, we expect TRA's supply to increase to 12 million tons in the fiscal year 2027, and further rise to 16 million tons and 25 million tons in the fiscal years 2028 and 2029, respectively.
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As of the end of September, 30% of the aforementioned 12-kilometer road and related docks have been completed, and it is expected that at least 40% will be completed by the end of the year, with full construction completed by mid-next year, requiring an additional two months for full operation.
In addition, after 20 months of decline, coal prices have gradually stabilized at around 42 USD per ton. China is also strictly controlling production to prevent overcapacity.
We maintain a "Buy" rating for Geo Energy Resources, with a target price of 0.59 CNY. (Phillip Securities Research)
