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THUNGELA RESOURCES LIMITED

TGA JSE Listed
Market Cap
** ~R14.77 Billion (ZAR)

Date: January 12, 2026 Subject: Investment Analysis: Thungela Resources Limited (JSE: TGA)

Step 1: Data Gathering & Source Verification

Reporting Periods Used:

Step 2: Metric Extraction

  • Market Cap: ~R14.77 Billion (ZAR)
  • Dividend Yield (L12M): 12.36%
  • Calculation: Final 2024 (1100 cps) + Interim 2025 (200 cps) = 1300 cps on a share price of ~R105.16.

  • Note: The yield has compressed significantly as the payout ratio normalizes from the "super-cycle" highs of 2022/23.

  • Liquidity Check: Pass (High Liquidity).

  • Average daily volume consistently exceeds 400,000 shares. It is a highly liquid mid-cap stock.

  • P/E Ratio: 5.8x

  • Calculation: Price (10516c) / TTM HEPS (~1799c).

  • Note: A very low multiple, signaling the market prices this as a "value trap" or a declining asset.

  • Price to NAV: 0.62x

  • Note: Trading at a massive ~38% discount to the value of its net assets (NAV ~16,944 cps).

Step 3: Operational & Strategic Analysis

Business Overview Thungela is a pure-play thermal coal exporter. Originally a spin-off from Anglo American, it owns significant mining assets in the Mpumalanga province (South Africa) and arguably the world's most valuable coal terminal stake (RBCT). Recently, it diversified geographically by acquiring the Ensham Mine in Australia, reducing its sole reliance on South African infrastructure.

Performance Trend (H1 2025 vs H1 2024)

  • Revenue: Contracting. H1 2025 revenue fell 12% to R14.8bn, driven by a sharp correction in global coal prices.
  • Margins: Squeezed. Adjusted EBITDA margin collapsed to 5% (from 13% prior), illustrating the high operational leverage—when coal prices drop, Thungela’s profitability drops faster due to fixed logistics costs.
  • Production: Stabilizing. South African export saleable production is guiding for ~13.7Mt for FY25, a slight improvement, showing that the worst of the Transnet rail crisis might be plateauing.

Sector Context

  • Macro Factor: Thermal Coal Price Normalization. The energy crisis "super-cycle" (where coal hit $300/t) is over. Prices have normalized to ~$89/t (Richards Bay Benchmark).
  • Logistics: While Transnet Freight Rail (TFR) is showing green shoots of recovery under new management, it remains the single biggest cap on Thungela's ability to export volume.

Step 4: The Verdict

Bull Case (Buy Rationale) Deep Value & Cash: Thungela is trading at 62 cents on the Rand (0.62x P/NAV). Even in a "normal" coal price environment, it is cash positive (holding ~R5bn net cash). The market is pricing it for bankruptcy or immediate obsolescence, which is exaggerated given the Ensham acquisition and the continued demand for coal in India/Asia.

Bear Case (Sell Rationale) Single-Commodity Risk: Unlike Exxaro, Thungela is a "pure-play" on thermal coal. It has no renewable energy division to pivot to. If global ESG mandates accelerate or carbon taxes bite harder, Thungela has no "Plan B." Additionally, any renewed collapse in Transnet rail performance immediately threatens their ability to ship product, turning them loss-making quickly.

Fair Value Estimate R145.00 – R160.00

  • Rationale: Re-rating to a conservative 0.85x NAV or a 7.5x P/E on normalized earnings implies significant upside.

Final Rating: SPECULATIVE BUY

  • Justification: Thungela is not a "Buy and Hold forever" stock due to the terminal decline of coal. However, at a 12% yield and 0.6x NAV, it offers an asymmetric trade for the next 12-24 months. You are essentially being paid a massive yield to wait for either a coal price spike or a logistics improvement.
AI Generated Analysis Last Updated: 2026-01-14