Our opinion on the current state of TGA

Thungela (TGA) represents Anglo American's coal assets, which were unbundled into the hands of Anglo shareholders and separately listed on the JSE and the LSE due to Anglo's policy of transitioning away from carbon-based fossil fuels like coal. Anglo completed the sale of its final 8% stake in Thungela on 25th March 2022 for R1.67 billion. Thungela operates as a major thermal coal exporter in South Africa, boasting over 7,500 employees and exporting coal to various regions including Asia, India, SEA, and East and North African countries. The company holds a 50% stake in Phola, which operates a coal processing plant, and a 23.22% interest in the Richards Bay Coal Terminal (RBCT). With a capacity to produce over 90 million tons of coal per annum, Thungela operates 7 mines in South Africa, consisting of 4 open-cast and 3 underground mines.

In its results for the year ending 31st December 2023, the company reported a profit of R5 billion, down from the previous year's profit of R18.2 billion. Earnings per share (EPS) fell to 3766c from 12708c. Thungela paid out a dividend of R2.8 billion and repurchased R500 million worth of its own shares. The company highlighted, "Industry railed volume of 47.9Mtpa in 2023, deterioration of 5% from last year • Mutual cooperation agreement establishes framework for procurement of critical spares on behalf of TFR• Industry deployed additional security on coal line."

Initially trading on the JSE from 7th June 2021, Thungela's share price experienced an immediate decline to 2190c from 2600c. Initially estimated to be worth a minimum of 4400c, the share price reached a high of 37752c on 16th September 2022. However, since then, it has been moving sideways and downwards, influenced by lower coal prices and challenges with Transnet. The company is also subject to the inherent volatility associated with being a single commodity share and reliant on Transnet for transporting its product to port. Thungela has committed to paying out at least 30% of "adjusted operating free cash flow" in the form of a dividend.