TL;DR The firm's financials seem "alright" but they look like they had worsened year on year. The valuation of shares could potentially suggest undervaluation, but I would caution against that as free cash flows are weak.
Source: The Asset
Business Profile
Source: SimplyWallSt
Golden Energy and Resources Limited (“GEAR”) engages in exploration, mining, processing and marketing of thermal coal. These are sourced from their coal mining concession areas which cover 42,904 hectares in South Kalimantan, Central Kalimantan and Jambi.
Income Statement
GEAR's income statement doesn't look very good, with a net profit margin that is quite low. This is mainly due to their higher operating expenses and overheads which had resulted in a low EBITDA margin from the onset. Furthermore, earnings have also decreased since 2017, which paints a more bleak picture for GEAR.
Balance Sheet
Overall, the firm's balance sheet seems relatively good. Their short-term liquidity seems okay, and their debt profile looks good based on the relatively low debt levels. Moreover, GEAR has sufficient earnings to service their debt levels. Sin
ce most of the debt is long termed, GEAR would also have more time to pay off such debt, leading to lower default risks. Balance sheet health had weakened over time as they took on more debt. In summary, balance sheet strength is above average, but not exceptionally high.
Cashflows
GEAR's cash flows, however, seem weak. This is evidenced by their low FCF margin of only 0.6%, as well as a low free cash flow to equity. Moreover, the firm's cash flows have also decreased since 2017. Moreover, the firms don't look like they have a sustainable dividend. Their dividend payout ratio was almost 2 times of net income. Moreover, dividends had exceeded FCFE, which means that the firm had dipped into their cash balance to pay out dividends. Additional cash flow was needed via more borrowed debt.
Efficiency Metrics
Overall, the firm seems efficient. Their ROIC and ROCE are high, while ROA seems neutral. However, ROE seems weak, as net income has not been able to catch up with the growth in equity over time. What perhaps is more worrying, is how these metrics had also weakened in 2018 too. This could suggest that the firm has become less efficient, but also point towards the decreasing earnings of the firm.
Valuation
The firm's valuation also looks rather strong. This is evidenced by their relatively low multiples of PE and EV. However, there was a decrease in EPS, which is a bad sign. Based on market valuation, the firm is also not generating enough free cash flows for their claimants. Price/Free Cashflow is exceedingly high due to the low free cash flow the firm has. Hence, the firm might be undervalued when compared against other firms, but their cashflows don't seem to justify the valuation placed by investors. With a slightly higher beta, this could mean that the firm's future cashflows should be discounted at a higher rate.
TL;DR The firm's financials seem "alright" but they look like they had worsened year on year. The valuation of shares could potentially suggest undervaluation, but I would caution against that as free cash flows are weak.
Source: The Asset
Business Profile
Source: SimplyWallSt
Golden Energy and Resources Limited (“GEAR”) engages in exploration, mining, processing and marketing of thermal coal. These are sourced from their coal mining concession areas which cover 42,904 hectares in South Kalimantan, Central Kalimantan and Jambi.
Income Statement
GEAR's income statement doesn't look very good, with a net profit margin that is quite low. This is mainly due to their higher operating expenses and overheads which had resulted in a low EBITDA margin from the onset. Furthermore, earnings have also decreased since 2017, which paints a more bleak picture for GEAR.
Balance Sheet
Overall, the firm's balance sheet seems relatively good. Their short-term liquidity seems okay, and their debt profile looks good based on the relatively low debt levels. Moreover, GEAR has sufficient earnings to service their debt levels. Sin
ce most of the debt is long termed, GEAR would also have more time to pay off such debt, leading to lower default risks. Balance sheet health had weakened over time as they took on more debt. In summary, balance sheet strength is above average, but not exceptionally high.
Cashflows
GEAR's cash flows, however, seem weak. This is evidenced by their low FCF margin of only 0.6%, as well as a low free cash flow to equity. Moreover, the firm's cash flows have also decreased since 2017. Moreover, the firms don't look like they have a sustainable dividend. Their dividend payout ratio was almost 2 times of net income. Moreover, dividends had exceeded FCFE, which means that the firm had dipped into their cash balance to pay out dividends. Additional cash flow was needed via more borrowed debt.
Efficiency Metrics
Overall, the firm seems efficient. Their ROIC and ROCE are high, while ROA seems neutral. However, ROE seems weak, as net income has not been able to catch up with the growth in equity over time. What perhaps is more worrying, is how these metrics had also weakened in 2018 too. This could suggest that the firm has become less efficient, but also point towards the decreasing earnings of the firm.
Valuation
The firm's valuation also looks rather strong. This is evidenced by their relatively low multiples of PE and EV. However, there was a decrease in EPS, which is a bad sign. Based on market valuation, the firm is also not generating enough free cash flows for their claimants. Price/Free Cashflow is exceedingly high due to the low free cash flow the firm has. Hence, the firm might be undervalued when compared against other firms, but their cashflows don't seem to justify the valuation placed by investors. With a slightly higher beta, this could mean that the firm's future cashflows should be discounted at a higher rate.