Introduction

 

Geo Energy Resources Ltd kicked off 2025 with a commanding performance, defying a softer pricing environment to post a 63% surge in net profit year-on-year. With strategic cost control, robust production growth, and the acceleration of its ambitious MBJ infrastructure project, the Singapore-listed coal miner has begun to reshape its operational and financial future. This article breaks down the company&rsquo s key Q1 metrics, strategic initiatives, and the broader market context to explain why Geo Energy is gaining investor attention in 2025.

 

Strong Financial Performance Despite Pricing Headwinds

 

Geo Energy delivered US$ 166.4 million in revenue for Q1 2025, a 68% year-on-year increase from US$ 99.0 million, driven largely by a 94% surge in coal sales volume to 3.5 million tonnes (Mt) from 1.8 Mt in Q1 2024. Despite a lower average selling price (ASP) of US$ 46.98/t (down 14% YoY), the company' s cost discipline allowed it to maintain solid margins:

 

&bull       Net profit jumped to US$ 14.1 million, up from US$ 8.7 million.

&bull       Production cash cost averaged US$35.8/t in 1Q25, down from US$41.5/t in 1Q24, reflecting efficiencies and a lower strip ratio at key mines.

&bull       Cash profit per tonne was US$ 11.16, with a stable cash profit margin of 23.7% (as reported in company filings).

 

The company also declared an interim dividend of 0.25 SG cents per share, a 25% increase over the previous year, reflecting a 19% payout ratio and signaling confidence in sustained profitability.

 

Operational Leverage and Strategic Mine Planning

 

The production boost was the result of operational planning carried out in 2024. Geo Energy had undertaken advanced overburden removal (pre-stripping) at its key mines, allowing easier and cheaper coal access in 2025.

 

Notably, Q1 output places Geo Energy ahead of schedule for its full-year production target of 10.5&ndash 11.5 Mt, implying potential outperformance.

 

Game-Changer: The MBJ Hauling Road Project

 

Central to Geo Energy&rsquo s transformation is its US$ 150 million MBJ infrastructure project, which includes a 92-km coal haul road and river jetty in South Sumatra. The project is:

 

&bull       65% complete on land clearing, with more than 10% of cut-and-fill done.

&bull       Running ahead of schedule, with completion targeted for June 2026.

&bull       Designed to transport 40&ndash 50 Mt annually, including third-party coal, creating toll revenue potential.

 

Once operational, the MBJ road is expected to:

&bull       Save over US$ 10/t in logistics costs.

&bull       Unlock TRA mine&rsquo s full capacity of 20&ndash 25 Mt/year.

&bull       Deliver a potential US$ 400-500 million EBITDA per annum when fully utilized.

 

Even at a conservative 3× EBITDA multiple, the MBJ project could be worth US$ 1 billion, dwarfing Geo&rsquo s current market cap of approximately US$ 400 million.

 

Conclusion

 

Geo Energy&rsquo s Q1 2025 results signal a strategic pivot toward becoming a vertically integrated energy infrastructure player. The company&rsquo s blend of production growth, cost discipline, and forward-looking infrastructure investments positions it uniquely among coal sector peers.

 

With robust cash flows, a supportive coal demand outlook, and transformational infrastructure underway, Geo Energy is well on track to exceed its 2025 targets and unlock significant long-term value. For investors seeking exposure to a lean, growth-oriented energy player with both yield and upside, Geo Energy is a stock to watch.

 

Paul Chew of PhillipCapital has kept his " buy" call and 47 cents target price on Geo Energy Resourcesafter the coal miner reported earnings growth for its 1QFY2025 that were in line.

 

In the three months to March 31, Geo Energy reported earnings of US$14.4 million, up 63% y-o-y, thanks to better sales with where production volume more than doubled to 3.2 million tonnes, aided by favourable weather conditions, says Chew in his May 19 note.

 

In addition, the company enjoyed lower unit production costs.

 

However, there was a drop in selling prices from around US$55 per tonne to US$47 per tonne now.

 

" A combination of higher domestic production and warmer weather in China has resulted in softer imports," says Chew.

 

Meanwhile, the construction of the new 92km US$150 million hauling road and jetty is on track to be completed by the middle of next year.

 

This road will help Geo Energy move coal from its mines for export. The road is also leased by neighbouring mines.

 

" There is strong interest in both the equity and access to this road infrastructure," says Chew.

 

Noting that earnings and production are tracking ahead of his forecast, Chew is keeping his FY2025 earnings estimate and discounted cash flow basis valuation of 47 cents, even with volatility in coal prices.

 

Following a " considerable rebound" in production levels for this year, Chew expects another 50% jump in production by FY2027 with the completion of the road.

 

 

 

 

 

 

 

 

 

Indonesia-based Geo Energy Resourcesis making an audacious push with a major infrastructure project in South Sumatra. It aims to turbocharge its growth, reshape its earnings profile and cement its role as a regional energy heavyweight, even as environmental opposition to coal escalates.

 

The Singapore-listed miner focuses exclusively on thermal coal, the crucial feedstock for power generation. It holds five coal concessions spread across Kalimantan and South Sumatra in Indonesia. Four are already in production, while one is in exploration. Through a joint venture with Indonesia-listed coal giant PT Bukit Asam, it also holds a 49% stake in a producing coal mine in East Kalimantan.

 

Geo Energy outsources most of its mining operations to contractors in Indonesia, allowing it to keep production costs low. Most of its coal is exported to China, its largest market by revenue, and several other Asian countries through long-term offtake agreements with Macquarie Bank and commodity traders Trafigura and EP Resources. Indonesia is its next largest market.

 

Output last year slipped to 7.9 million tonnes from 8.4 million in 2023 due to prolonged extreme rainfall in Indonesia. Production for 2025 is expected to increase to between 10.5 million and 11.5 million tonnes as the company made a concerted effort last year to remove overburden - rocks or soil lying on top of a mineral deposit - ahead of time to ease future coal extraction.

 

Output starting from next year is poised to go up even more. The catalyst for this is Geo Energy' s maiden integrated infrastructure development, a massive project that will comprise an extensive haul road stretching 92km as well as a jetty, which will provide access to export markets for all producing coal mines in South Sumatra' s North Musi Rawas Regency, a region spanning more than 6,000 sq km.

 

Purpose-built to unlock South Sumatra' s coal-rich heartland, the development is slated for completion in the first half of 2026. It will have a road haulage capacity of up to 50 million tonnes of coal annually. TRA, a Geo Energy subsidiary, will claim half of that capacity for its own coal, while the rest will be leased to surrounding coal miners.

 

' A cash cow'

This business model effectively turns Geo Energy into a critical logistics powerhouse in the region. The idea behind this is as strategic as it is ambitious. Operating the haul road and jetty will allow Geo Energy to collect tolls and fees, giving it new revenue streams beyond coal mining.

 

The payback is perpetual and potentially astounding, considering the area surrounding TRA' s mining concession in South Sumatra is home to over two billion tonnes of untapped coal reserves. TRA itself has about 273 million tonnes of coal reserves.

 

Any coal miner looking to monetise these reserves will find Geo Energy' s infrastructure development indispensable, as the area currently lacks suitable logistics and transport solutions.

 

' With the new haul road, we will have a monopoly. It' s a captive market,' says Philip Hendry, Geo Energy' s chief operating officer / Photo: Albert Chua

 

" It is a cash cow," Philip Hendry, Geo Energy' s chief operating officer, tells The Edge Singapore. An accountant by training, Hendry assumed his current appointment in early 2023 and has held finance and senior leadership roles in companies in the energy, shipping, transport and logistics sectors.

 

" With the new haul road, we will have a monopoly. It' s a captive market," he says. While there is an existing 137km road in the area shared by several mining companies, it' s not ideal for heavy haulage, he adds.

 

Geo Energy expects to reap cost savings of more than US$10 per tonne ($13.08 per tonne) for its own coal transportation once the haul road is ready. According to Hendry, this will undergird its profitability and give it a strong competitive edge over other miners, even if coal prices fall more than 20% from current levels of just over US$50 per tonne.

 

" Our cost base will be very competitive after the road is done. We own the infrastructure, the logistics and the whole supply chain. Even if coal prices go down to US$35 per tonne, where many coal mining companies will not be able to produce, we will still be making money."

 

Geo Energy' s production cash cost last year was US$40.32 per tonne. With an average selling price of US$50.69 per tonne, it made a cash profit of US$10.37 for every tonne of coal produced in 2024.

 

With the haul road and jetty in place, and if coal prices remain at current levels, it expects to generate US$400 million to US$500 million annually in ebitda. Ebitda last year amounted to about US$100 million.

 

No lack of backers

Geo Energy will spend about US$150 million on the haul road and jetty. Last year, it appointed two Chinese state-owned enterprises - CCCC First Harbor Consultants and Norinco International Cooperation - to build the integrated development.

 

The funding structure for the project is skewed in favour of Geo Energy, which will bear less than 15% of the entire cost at the onset. The two Chinese contractors will fund the remaining project costs and get paid two years after the development is fully completed. This gives Geo Energy a valuable runway to monetise the new infrastructure before repayments kick in.

 

" The beauty of this is, in addition to the two-year deferred payment plan, we shifted most of the operational risks from Geo Energy to the contractors. This is a very significant risk mitigation for our company," says Hendry.

 

But why are the Chinese amenable to such terms? " The Chinese have their KPIs. This road is part of their portfolio for the One Belt, One Road programme. They have a lot of cash to allocate to projects that can enhance this programme," he lets on.

 

In a further display of support for this project, China Export & Credit Insurance Corporation, an entity under China' s Ministry of Finance, is providing full insurance coverage for the construction of the haul road and jetty.

 

While the entire integrated infrastructure will be ready only next year, Geo Energy has already signed term sheets with a few major coal producers to lease out part of the haul road to them.

Thriveni, a mine developer with projects in India, Indonesia and Africa, wants to use the road to move 15 million tonnes of coal annually for up to 50 years starting from January 2028.

 

Another coal miner, Astaka Dodol, is eyeing a haulage capacity of up to 10 million tonnes of coal annually for 10 years beginning July 2026.

 

Embedding sustainability

Besides scaling up, Geo Energy is also embedding sustainability into the infrastructure development. Plans include electric vehicles (EVs) for coal hauling, charging and battery-swap stations, and even solar farms.

 

" Once the EVs are in place, your operating costs will only decrease because you' ll save on fuel. You' ll see our operating costs, if anything, get lesser and lesser as we utilise EVs more and more, and our road will become more and more profitable," says Hendry.

 

While incorporating green features into the infrastructure development may not be enough to appease some coal critics, it is a significant step by Geo Energy to align itself with rising environmental expectations even as global coal demand remains unshaken by calls for a phase-out.

 

Still, will the current economic slowdown in China and Indonesia throw a spanner in the works for Geo Energy, which gets more than 90% of its revenue from these two markets?

" The way I see it, this is just cyclical. We can' t control the economy. But the long-term prospect of coal remains very positive," says Hendry.

 

From the looks of it, Geo Energy appears on track to continue digging deeper into Indonesia' s rich coal reserves while paving the way - both literally and figuratively - for growth in a future where coal, for all its controversy, remains indispensable to emerging markets.

 

Things are already looking up, even with its infrastructure development still months away from completion. The company issued a profit guidance on April 28, saying it expects to report a substantial increase in earnings for 1Q2025 as production volumes swelled to about 3.6 million tonnes from 1.8 million tonnes a year earlier. After-tax profit for 1Q2024 fell 46% y-o-y to US$8.7 million on lower output and selling prices.

 

" Advance overburden removal was carried out last year. That allows us easier access to coal this year, which is when we start reaping the benefits," says Hendry.

 

Geo Energy pays at least 30% of its annual earnings as dividends every quarter. Its share price is up about 20% so far this year, giving it a market cap of around $500 million. The company makes no secret of its ambition to become one of Indonesia' s top five coal producers with a valuation of at least $1 billion.

 

" Looking at our current share price, I believe Geo Energy is significantly undervalued," says Hendry.

 

Analysts from KGI Securities, Phillip Securities and Lim & Tan Securities have an " outperform" or " buy" rating on the stock. KGI has the highest target price of 71 cents, followed by Lim & Tan with 60 cents and Phillip Securities with 47 cents.

 

 

 

 

 

Lim & Tan Securities analysts Nicholas Yon and Chan En Jie have initiated a " buy" call on Mainboard-listed coal mining company Geo Energy Resources on April 25.

 

Based on its last-closed share price of 35 cents on April 24, the analysts see an upside of 71.4% with their target price of 60 cents, as they note that the company will benefit from an upcoming state-of-the-art infrastructure development.

 

Upon its completion, the company' s ebitda levels are projected to triple from US$60 million ($78.8 million) in FY2024 to US$168 million in FY2026, as the company will be able to transport larger volumes of coal more efficiently. This will also save the company on current tolling costs and generate additional revenue by charging third-party users, Yon and Chan write. Geo Energy' s financial year ends on Dec 31.

 

FY2025 is also expected to be a better year after the lack of one-off costs in FY2024, removing overburden and surface debris across the company' s operating mines to improve coal access and achieve higher production volumes. This coming year, the company also targets to sell 10.5 million to 11.5 million tonnes of coal, 33% to 46% higher y-o-y. In FY2024, the company sold 7.9 million tonnes of coal, down from FY2023' s 8.9 million tonnes.

 

" With emerging countries like China and Indonesia still relying on coal for power generation, coupled with President [Donald] Trump' s push for increased coal consumption, we believe Geo Energy will remain a beneficiary of sustained coal demand," Yon and Chan add.

 

The analysts also see other positives including the company' s newly-acquired TRA coal mine, which began to see " meaningful contributions" of 1.1 million tonnes in FY2024. The company acquired an additional 15% stake in TRA at a 12.5% discount in March this year, bringing its total effective interest to 75.1%, the analysts note.

 

" This will streamline ownership and enhance control over its TRA mining operations."

 

They add that they expect the company' s production volumes to " ramp up steadily" over the next few years to 25 million tonnes by FY2029, which will contribute " significantly" to its overall bottomline.

 

In addition, Geo Energy' s US$150 million investment into a new 92km hauling road and a jetty will pay off in two folds once the project is completed in the first half of 2026.

 

" Firstly, the transportation from Geo Energy' s mines to the port will utilise trucks that can carry three to four times their current load and offer faster and safer navigation compared to the existing route," Yon and Chan point out.

 

" Secondly, Geo Energy has the opportunity to establish a new recurring revenue stream by leasing its newly built infrastructure to other miners in the region. This will clear Geo Energy' s bottleneck of an inefficient transportation system, which will feed into [the company' s] earnings once infrastructure is completed," they add.