Geo Energy should end FY16 on a high note

SINGAPORE (Nov 16): NRA Capital is maintaining its “overweight” recommendation with fair value of 34.5 cents on Geo Energy Resources in anticipation of a jump in earnings from 4Q16.

Geo Energy’s 3Q16 earnings of US$7.4 million ($10.5 million) exceeded the brokerage’s estimates of US$5.4 million. For 4Q16, NRA analyst Liu Jinshu has raised his earnings forecast to US$12.8 million on higher average selling prices of coal. This is despite taking into account a US$2.1 million of one-off expense due to additional tax assessment by the Indonesian government.

Liu notes the group is expected to produce 2.25 million tonnes of coal in 4Q, which would mean a full-year output of 5.4 million tonnes. In FY17, that figure could go up to 10 million tonnes.

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