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- Straist Asia(SAR) appears to have committed 2008 coal price at USD70 per ton ASP upto its tgt of 9Mt http://info.sgx.com/webcorannc.nsf/New+Announcement+Last+3+Months+by+Company+Name?Openview&RestrictToCategory=SSTRAITS%20ASIA%20RESOURCES%20LIMITED
- Current coal future price abt USD195 per metric ton seems to indicate SAR is selling too cheap
- Just to side track: 1 metric ton(mt )of coal,specific energy equiv of 27 GJ/mt costs USD 195 compared to 1mt (7.34barrel)of crude oil,spec energy equiv. of 45 GJ/mt cost 7.34x144 = USD1060. It costs abt 5.4 times more compared to coal fired power stations - to burn oil instead of coal to generate power and get extra energy output of 45/27 ie.. 67% more.
- Does it make sense to export more coal for Vietnam,China, Indonesia ,S.Africa etc and import more oil to generate power or electricity for their own use?
- It is obvious the recent drop in coal price is a temperary correction and should climb back soon ,based on increasing demand and declining supplies from coal exporting countires. Crude oil price rise has been associated with speculation and with the comparative, economical advantage of using coal vs oil - you be the judge whether SAR stock price gapdown is justified?
- Additonally one should decouple the coal price trend with crude oil price trend based on the above-mentioned.
Thanks and regards
GT
OCBC Research
FY07 FY08F FY09F
Turnover US$m 251.0 US$m 589.8 US$m 707.7
Net Profit US$m 28.6 US$m 161.6 US$m 177.5
EPS US$0.03 US$0.148 US$0.163
EPS Growth -42.6% 393.1% 9.9%
PER 91.9x 18.6x 17.0x
Net Div Yield 0.6% 3.2% 2.3%
VS
Reuters - Consensus Estimates Trend
FY08F FY09F
Sales SGD$m 824.25 SGD$m 1,296.15
EPS SGD$0.2219 SGD$0.4518
http://www.reuters.com/finance/stocks/estimates?symbol=STRL.SI
Straits Asia is definitely oversold. It should rebound anytime very soon next week. Its fundamentals are solid, by solid Australian parent company. Crude oil price at record US$146/barrel will only mean that Coal price as substitute for oil will only go up. Demand for coal is very strong especially these few years. Bulk of the supply goes to Indonesia, China.
Business Times today reported that Jarkarta index down 3.9% on 3 July 2008 due to drop in coal price. But refer to today's Jarkarta index closing. It is up 28.14 pts or 1.25% to 2314.75 pts. The 2 Indonesian coal stocks PT Bumi Resources and PT Indo Tambangraya Tbk Megah which had dropped on 3 July 2008 as reported by Business Times, show strong rebound today. PT Bumi Resources jumped by 4.90%. And PT Indo Tambangray Tbk Megah shows price increase of 4.10%.
Straits Asia is definitely oversold. Just be patient. Hold your shares and Big Boys will push it up to S$ 3.50 in short term or over S$ 4.00 in medium term. OCBC recommended Buy at S$ 4.80.
hee...contra on this burger 3.04x5 yester and out today at 3.10 !!
cheers !!
damn so attracted to enter again yester at 2.98 !! but cant get it !
:D
If you look at the coal price, it is still >U$10 higher than last week average of $172.
So the drop in share price is not only due to the coal price but also market sentiment....everyone rushing to exit.
Australian coal price to stay strong despite pullback
Alex Wilson, Dow Jones Newswires | July 03, 2008
A SHARP pullback in benchmark Australian thermal coal prices is a natural correction after a recent surge, according to analysts.
Market commentators also said prices in Asia were set to stay high with all the indicators pointing to ongoing tightness in the market.
http://www.theaustralian.news.com.au/story/0,25197,23963477-5005200,00.html
I think it is just a short term profit taking from the record coal price, the demand remains
robust. (China relies on coal to fuel two thirds of its power plants)
Fri, 16 May 2008, 11:30:28 SGT OCBC
Rising oil and coal price. Recent rise in coal prices were a function of supply constraints from key coal supplying markets as well as port congestion issues, coupled with growing demand from countries such as China and India. The supply constraint issues have eased off slightly and this has allowed coal prices to pare off from the early 2008 levels. The high coal price at this stage should begin to flow into SAR revenues in FY08 and FY09. The present high price of oil could affect production cost, which in turn could result in some margin erosion. However, we had already taken this into consideration and factored in cost assumption of US$38 per ton for FY08 into our DCF valuations.
Maintain BUY. We are maintaining our net profit estimate of US$161m for FY08, based on the recent significant spike in coal prices coupled with the substantial increase in production estimates. We are lowering our projected coal price from US$80 to US$68 per ton as per management guidance and maintaining cost at US$38 per ton in FY08. The drop in selling price offsets the revenue gain from the increase in production estimate, hence we are maintaining our BUY rating and target price of S$4.80.
sharp fall in coal prices in Europe, U.S. Straits Asia Resources (AJ1.SG)
down 9.2% at S$3.17 while Noble Group (N21.SG) down 6.1% at S$2.16. But
decline may be mere knee-jerk reaction, as global coal demand remains
robust. Local house dealer eyes support for Straits Asia at S$3.00, adds
weakness may be opportunity to accumulate as industry fundamentals remain
positive for sector; "we do not see any easing in the oil prices in the
short to medium term. Higher oil prices potentially make coal a more
attractive power source." Near-term support for Noble at S$1.93, based on
61.8% retracement of rise to 52-week high of S$2.87 from August 2007 low of
S$1.35. (FKH)
Straits Asia is on target to produce approximately 9.0 million tonnes of coal in 2008, with approximately 5.0 million tonnes and 4.0 million tonnes contributed by the Jembayan and Sebuku mines respectively.
They have experienced strong production performances during 1Q08, which has traditionally been a wet period and the weakest quarter in production terms. Straits Asia produced 1.20 million tonnes and 0.95 million tonnes from Jembayan and Sebuku respectively during this quarter.
They continue to invest in on-mine infrastructure to increase production capacity at both mines, with the installation of a 2nd wash plant at Sebuku and the increase of coal stockpiling and barge loading facilities at Jembayan well underway. This capital expenditure will be adequate to increase their total annual production capacity to 19.0 m tonnes (11.0 m tonnes and 8.0 m tonnes at Jembayan and Sebuku respectively). They are therefore well placed to have the ability of producing approximately 14.0 m tonnes per annum in the medium term and additional production beyond that. They remain confident that their '09 production levels will meet their target of 11 m tonnes.
They note recent market speculation about the perceived risks relating to the boundary extension at Sebuku being delayed as a result of alleged corruption investigations into the Indonesian forestry department. Straits Asia firmly believes that no such investigations (if they exist) have any relevance to the process being followed by Straits Asia. Straits Asia is in the final stages of its approvals process and continues to make progress towards its approvals at Sebuku being granted. Although there can be no certainty, Straits Asia is confident based on the current process that the Sebuku approvals will be concluded before the end of the '08 calendar year.
The integration of Jembayan has gone smoothly and they're spending much effort on drilling out the Jembayan resource.
The market price for seaborne thermal coal has continued to remain robust, driven by strong demand from end users. It was previously communicated that Straits Asia has committed and priced approximately 7.9 m tonnes of its '08 production. They have since then taken advantage of the strong market conditions and reported that approximately 9.0 m tonnes of '08 production has now been committed at an average price of US$70.50 per tonne. Approximately 1.9 m tonnes of their '09 production (which mainly relates to the extension of certain '08 contracts) has already been committed at an average price of US$66.00 per tonne. The balance of '09 production remains unpriced and accordingly the Company is very well placed to take full advantage of these strong coal market conditions.
Hi all why this share always on the downside now days? will it go up? up to how much it can fly?
zhuge_liang ( Date: 03-Jun-2008 23:38) Posted:
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