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1. Company Snapshot

1.a. Company Description

Thungela Resources Limited engages in the mining and production of thermal coal in South Africa.The company owns interests in and produces its thermal coal from seven mining operations in the Mpumalanga province of South Africa, including Goedehoop colliery, Greenside colliery, Isibonelo colliery, Khwezela colliery, Zibulo colliery, Mafube colliery, and Rietvlei colliery.It also exports its products to Indian, Asian, SEA, the Middle East, and North African markets.


The company was founded in 1945 and is based in Johannesburg, South Africa.

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1.b. Last Insights on TGA

Thungela Resources Limited's recent performance was hindered by softer coal prices, which weighed on the company's revenue. Despite exceeding production guidance, the decline in coal prices resulted in a decrease in profitability. Furthermore, the company's operational resilience was tested by geopolitical challenges, which added to the complexity of its business environment. Additionally, the acquisition of the remaining stake in Ensham business in Australia for $30 million may have diverted management's attention and resources away from core operations.

1.c. Company Highlights

2. Thungela Resources Ltd Earnings Analysis

Thungela Resources Ltd delivered a mixed performance in its 2024 annual results, with operational improvements offsetting challenges from softer coal prices. Revenue for the year was ZAR [specific figure], reflecting a decrease compared to the previous year due to pricing pressures. The company reported an adjusted EBITDA of ZAR 6.3 billion, down from ZAR [previous year's figure], as margins compressed under the weight of lower coal prices. Net profit came in at ZAR 3.5 billion, a notable decline from the prior year’s ZAR [previous figure]. Despite these headwinds, the company maintained a strong focus on operational efficiency and cost management, key themes emphasized during the earnings call.

Publication Date: Mar -17

📋 Highlights
  • Operational Excellence and Safety Metrics:: Thungela achieved a fatality-free operation for over two years, with improved safety metrics, including a total recordable case frequency rate of 1.93, down from 2.8 in 2023. South Africa saw a rate of 1.07, while Australia improved to 13.21 from 22.63 in 2023.
  • Production Growth and Market Performance:: The company exceeded market guidance with 17.7 million tonnes of export saleable production. South African production rose 11% to 13.6 million tonnes, while Ensham reached 4.1 million tonnes, a 52% increase since acquisition. Despite softer prices, Thungela reported a net profit of ZAR 3.5 billion.
  • Financial Strategy and Shareholder Returns:: Thungela returned ZAR 2.3 billion to shareholders through a final dividend of ZAR 11 per share and a buyback of up to ZAR 300 million. The company maintained a strong net cash position of ZAR 8.7 billion at year-end.
  • Environmental and Regulatory Focus:: Thungela contributed ZAR 204 million to environmental guarantees in South Africa, expecting a decrease in 2025. In Australia, contributions reached ZAR 970 million in 2024, with a target to halve this in 2025 if accepted into a Queensland financial provisioning scheme.
  • Cost Optimization and Market Diversification:: Thungela is focused on reducing cash costs, with South African costs per tonne increasing by 4.2%, partially offset by higher production. In Australia, the all-in sustaining cost for Ensham is USD 103–108 per tonne, depending on exchange rates. The company is also exploring market diversification and strategic initiatives, including rail improvements and the potential feasibility of the Lephalale gas project.

Financial Performance

“Our focus remains on controlling controllable factors, maintaining safety, productivity, and cost management to deliver value to our shareholders,” said Hugo Nunes, Head of Investor Relations, during the earnings call.

Operational Highlights

Thungela also made progress on its strategic initiatives, including rail improvements, expansion projects, and market diversification. The company’s focus on cost optimization was evident in its capital allocation strategy, with ZAR 1.7 billion each on sustaining and expansionary projects, both on schedule and budget.

Future Outlook

Analysts have estimated revenue growth for next year at -5.1%, reflecting expectations of continued pricing pressure in the coal market. Management has indicated a focus on controlling controllable factors, optimizing rail performance, and exploring market opportunities to mitigate these challenges.

Valuation Metrics

Thungela’s commitment to operational excellence and strategic execution remains a key differentiator. While near-term challenges persist, the company’s focus on cost management, productivity, and disciplined capital allocation positions it well to capitalize on improving market conditions over the medium term.

3. NewsRoom

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Caledonia Mining Corporation Plc Appointment of July Ndlovu as Independent Non-Executive Director

Nov -05

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Thungela Resources (JSE:TGA) Shareholders Will Want The ROCE Trajectory To Continue

Aug -06

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Thungela Resources Limited's (JSE:TGA) top owners are retail investors with 57% stake, while 43% is held by institutions

Jul -01

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Stocks to watch this week: Broadcom, Lululemon, British American Tobacco, Dr Martens and Rémy Cointreau

May -30

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Thungela Resources Ltd (TNGRF) (FY 2025) Earnings Call Highlights: Strong Operational ...

Mar -18

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Thungela acquires remaining stake in Ensham business in Australia for $30m

Mar -03

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Thungela Profit Slumps on Lower Coal Prices and Rail Bottlenecks

Aug -19

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Stocks to watch this week: Burberry, Vodafone, BT and Walmart

May -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Underground

Expected Growth: 4.83%

Thungela Resources' Underground segment growth of 4.83% is driven by increased coal production, improved operational efficiency, and favorable market conditions. Strong demand from Asian markets, particularly China and India, has boosted coal prices, contributing to revenue growth. Additionally, the company's cost-saving initiatives and investments in technology have enhanced productivity, further supporting the segment's growth.

Opencast

Expected Growth: 4.83%

Thungela Resources Limited's Opencast segment growth of 4.83% is driven by increasing coal demand, favorable weather conditions, and operational efficiencies. Additionally, the company's focus on cost reduction and capital discipline has enabled it to maintain a competitive cost structure, further supporting growth.

7. Detailed Products

Thermal Coal

Thungela Resources Limited is a leading producer of thermal coal, which is used to generate electricity and provide heat in industrial processes.

Metallurgical Coal

The company also produces metallurgical coal, which is used in the production of steel and other metals.

Export Coal

Thungela Resources Limited exports coal to various countries around the world, catering to the global demand for energy.

8. Thungela Resources Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

Thungela Resources Limited operates in the coal mining industry, which has few substitutes. However, the increasing demand for renewable energy sources poses a moderate threat of substitutes.

Bargaining Power Of Customers

Thungela Resources Limited's customers, mainly electricity generators and industrial consumers, have limited bargaining power due to the company's dominant position in the South African coal market.

Bargaining Power Of Suppliers

Thungela Resources Limited relies on a few key suppliers for equipment and services. While the company has some bargaining power, suppliers can still exert some pressure on prices and delivery terms.

Threat Of New Entrants

The coal mining industry has high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to challenge Thungela Resources Limited's position.

Intensity Of Rivalry

The coal mining industry is highly competitive, with several established players competing for market share. Thungela Resources Limited faces intense rivalry from other major coal producers in South Africa.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.53%
Debt Cost 3.95%
Equity Weight 99.47%
Equity Cost 0.26%
WACC 0.28%
Leverage 0.54%

11. Quality Control: Thungela Resources Limited passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Ithaca Energy

A-Score: 6.7/10

Value: 8.0

Growth: 5.9

Quality: 4.6

Yield: 10.0

Momentum: 10.0

Volatility: 1.7

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Thungela Resources

A-Score: 5.5/10

Value: 9.8

Growth: 5.3

Quality: 6.2

Yield: 5.6

Momentum: 4.5

Volatility: 1.7

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Seplat Energy

A-Score: 5.4/10

Value: 7.6

Growth: 4.0

Quality: 5.3

Yield: 8.1

Momentum: 4.5

Volatility: 3.0

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Aker Solutions

A-Score: 5.1/10

Value: 8.5

Growth: 6.2

Quality: 5.8

Yield: 6.9

Momentum: 0.5

Volatility: 2.7

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Lubelski Wegiel Bogdanka

A-Score: 5.0/10

Value: 10.0

Growth: 4.0

Quality: 2.4

Yield: 4.4

Momentum: 3.5

Volatility: 5.7

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JSW

A-Score: 3.1/10

Value: 9.8

Growth: 1.6

Quality: 3.5

Yield: 0.0

Momentum: 2.0

Volatility: 2.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.92$

Current Price

3.92$

Potential

0.00%

Expected Cash-Flows