Thungela: A Deep Value Bet on Energy Reality
Why this “dirty” coal miner might be one of the most asymmetric opportunities of the next energy cycle
There is a saying in markets. More money is lost waiting for the next recession than during the recession itself. I would add this. More money is missed avoiding unpopular stocks than in all the ESG-approved darlings combined.
Coal is supposed to be dead. And yet Thungela Resources, a South African thermal coal producer, is printing hundreds of millions in annual profit, sitting on a fortress balance sheet, buying back stock, paying enormous dividends, and trading at less than one times earnings excluding cash.
This is not just cheap. It is deeply misunderstood.
Thungela is what happens when narrative and reality violently diverge. The world says coal is finished. But Asia, where the real demand sits, is consuming more coal than ever. The ESG crowd dumped their shares. The cash kept flowing. And now, you are looking at a business that could deliver twenty percent annual yields and still double, triple, or more simply by surviving.
Why I am Looking at This
I do not build model portfolios. I build real portfolios with real money. I am not here to be morally correct or ride thematic trends. I am here to find deeply mispriced, high-cash-flow businesses with limited downside and meaningful upside.
Thungela fits the bill.
Market cap: 542 million British pounds
Net cash: 369 million British pounds
Enterprise value: around 173 million British pounds
Expected earnings for 2025 and 2026: around 240 million British pounds each year
Dividend yield: over 20 percent
Mine life: extended to 2040, with potential to 2050
Valuation: under one times earnings excluding cash, under two and a half times nominal price-to-earnings ratio
These numbers are not projections based on wishful thinking. They are grounded in historical performance and near-term visibility. In the last three years alone, Thungela generated over one billion pounds in profits.
Yet it is priced like a company going out of business next year.
The Core Mispricing
This is not just about low multiples.
The market is pricing Thungela as if coal demand is collapsing and the business is dying. The opposite is true.
Global coal demand reached another record high in 2024. Asia, especially China and India, is driving this trend. These two countries alone represent one third of the world population but consume two thirds of global coal. Demand is forecast to rise through at least 2030, likely well beyond that.
Western investors focus on headlines. But coal is not about headlines. It is about base-load energy in developing economies. It remains the cheapest and most reliable source of thermal energy. And while renewables scale slowly and intermittently, coal continues to fill the gap.
The Business Model
Thungela is a focused one-product company. That is a strength.
It produces high-quality bituminous thermal coal from mines in South Africa and Australia. These assets were spun off from Anglo American in 2021. Institutions were forced to sell due to ESG mandates. Retail investors ignored it. The stock traded at one and a half times earnings and paid a 25 percent dividend.
The result: Thungela rallied more than fifteen times in under two years. Then coal prices normalized, and the stock collapsed. But the business did not.
Today, Thungela owns and operates productive, long-life coal assets with cash flow visibility into the 2040s. It has extended reserves, acquired new mines, and holds a strategic stake in the Richards Bay Coal Terminal.
The Cash Flow Setup
This is the part that is hard to ignore.
2024 net income: 148 million pounds
Free cash flow after sustaining capex: around 153 million pounds
Net cash: 369 million pounds
Expected earnings for 2025 and 2026: around 240 million pounds each year
Dividend outlook: over 20 percent annually, potentially more with special payouts
Buybacks: active and ongoing
Even if you cut earnings in half, the stock still trades at two times earnings excluding cash.
That is not just cheap. That is asymmetric.
And that is before considering the optionality of a coal rebound, weather volatility, or sudden supply disruptions.
Unlock the rest of this report:
This is not a model portfolio. This is real capital, real signals, and real conviction.
In the full report, I break down:
What catalysts could unlock a 2–3x return
The misunderstood global energy dynamics
My personal buy zone
The key risks I’m watching
Whether I’ll add Thungela to my real-money portfolio
If you’re serious about asymmetric investing, this is the kind of setup you want to study.
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