Jan 13, 2011

Asia Green seeks stake in Indonesia coal

Asia Green Energy Plc (AGE), Thailand's top coal importer, is in talks to acquire majority stakes of coal mines in Indonesia and minority shares of power plants in China as part of its five-year plan to boost revenue to 10 billion baht.
Managing director Panom Kuansataporn said the MAI-listed company was exploring opportunities in Kalimantan and Sumatra with a targeted expenditure of 2 billion baht within the next year.
These medium-sized coal mines have reserves of about 10 million tonnes. "We expect to conclude one of the discussions to acquire more than 50% of [one Indonesian company] this year and another one in 2012. This is mainly aimed at securing enough supplies of coal amid sharp rise of demand year after year," he said as quoted by Bangkokpost.com.
AGE currently imports all the coal it sells from Indonesia. This year, it aims to increase import volume by 20% to at least 1.4 million tonnes, he added.
AGE will also begin selling coal to China this year with estimated sales volume of one million tonnes. China needs about 200 million tonnes of coal as local production has decreased.
Panom said AGE was also in talks to buy minority shares of coal-fired power plants in China where the owners want to secure adequate coal supplies. Recently, five state-owned Chinese plants reported operational problems because of limited fuel supplies.
AGE aims to increase its revenue to 10 billion baht in five years with sales volume of around 4-5 million tonnes of coal, Mr Panom said.
The company has not yet released full-year financial results for 2010 but Mr Panom said it expected to beat its revenue target with growth of at least 30% from the year before. In the first nine months, AGE reported total revenue of 2.1 billion baht with a net profit of 91.3 million.
Financial adviser Country Group Securities has recommended that the company issue debentures worth 2 billion baht to raise funds for the share acquisition of Indonesian coal mines. The company's first bonds are expected to be issued by middle of this year.
In 2011, AGE projects to increase its sales revenue by more than 40%, thanks to the coal trade into China and the sharp rise of coal prices.
Coal price at the port of Newcastle in New South Wales, the benchmark for Asia, are currently high at $131 per tonne as rains and heavy floods have disrupted supplies in Australia, the world's largest coal exporter.
By investing 1.1 billion baht in its own ports and warehouses in Samut Sakhon and Ayutthaya, Asia Green also expects to lower logistics cost by 2% over the next three to five years, Panom added.
AGE recently offered 70 million free convertible warrants to existing shareholders on the register as of Jan 13. The SET had posted an XA sign on the shares warning of a dilution effect from the capital increase.
The company's shares fell 18% yesterday on the Market for Alternative Investment to close at 14.30 baht, in trade worth 347.8 million baht.

Disclosure: No position at the stock mentioned above.

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