Coal Asia Holdings Inc. is still seen as an undervalued company based on current valuation and market capitalization, even after recently trading at 30 percent to 50 percent above its listing price.
In compliance with PSE requirements related to its initial public offering, Coal Asia engaged an accredited third party company to reevaluate and revalue the coal resources of unit Titan Mining and Energy Company.
A previous valuation was done in May by Multinational Investment Bancorporation, which assessed the coal reserves at a combined amount of 123 million metric tons at P12.5 billion, based on March data.
Recent data as of June and July of this year, however, initially claimed that the previous valuation based on the existing coal operating contracts in Davao Oriental and in Zamboanga-Sibugay may still be undervalued because of current coal prices and the estimated yield from the operating contracts.
Coal Asia’s market capitalization stood at P4.24 billion as of the last trading day, which means the company’s stock price needed to jump by at least 300 percent to meet Multinational Investment’s previous valuation.
Coal Asia said it had to make the re-revaluation to apprise the investing public of the latest development.
“Based on the results of the revaluation, the corporation shall conduct a study on options to enhance stockholders’ benefits. The enhancement in the corporation’s assets will allow it to have retained earnings, and will result to a possible buyback program, depending on a surplus situation,” Coal Asia said in a filing.
Another factor which solidifies the company’s valuation is its plans to be involved in the power production, especially for the Mindanao region. The projected volume of the operations of Coal Asia’s subsidiary, Titan Mining and Energy, is enough to supply the expected explosion in demand by large scale energy producers racing to establish their coal-fired energy generating plants in the region.
As one of the few major coal mining players in the area, Coal Asia has established a key position by initiating discussions with the Energy Department and other power companies that plan to expand operations in the southern part of the country for long-term supply agreements. Positive talks with large power producers have been initiated, including the possibility of a mine-mouth power plant. source
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