A listing on the Taiwan stock exchange is likely in the near future. L&L Energy currently trades exclusively in the United States. While the company is based in America all of its operations take place in China. Most Chinese stocks trade at a discount on U.S. markets due to past irregularities at some companies. Slower growth in China has caused investors additional concern. Valuations tend to be significantly higher in Taiwan. L&L Energy is hopeful that a listing there will lift its P/E multiple so it can take advantage of a government mandated consolidation in the Chinese coal industry. The company previously made some non-accretive acquisitions which increased its size sufficiently to put it in the "safe harbor" category, meaning the government can't force it to merge at the deadline (December 31, 2013). In fact, L&L Energy is in position to make acquisitions at attractive prices, if it can raise the capital to do so. Stock deals at 2x-3x earnings promise to be earnings neutral. If the company can achieve a higher valuation larger transactions might become possible. Plus any deals will add to income right away.
Business remains strong in the meantime. Coal prices are steady in China. Industrial expansion has slowed in relation to historic rates but remains high compared to the U.S. and Europe. Imports provide some competition but their impact is limited by distribution bottlenecks from the ports they unload at. China is starting to develop a natural gas fracking industry. That output is likely to replace petroleum more than coal, however, at least for the next 5-10 years. Pollution from coal remains an issue. The current focus is on reducing smog rather than co-2 emissions.
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