Courage Investment Group Limited

Income statement: notes and sources

Sources: Annual Report 2021; FY2023 Final Results; FY2025 Final Results. Negative impairment values denote reversals. EBITDA is derived and includes impairment/ECL and one-off disposal losses (FY2023 includes a US$2.10m disposal loss and US$0.79m JV share of loss).

Margins and growth (derived)

Revenue CAGR FY2021–FY2025 (derived): 17.6%, though roughly two-thirds of the FY2025 step-up is low-margin coal trading. Excluding trading, logistic-transportation revenue CAGR FY2021–FY2025 is 6.8%.

Balance sheet: notes and sources

Sources: Annual Report 2021; FY2023 and FY2025 Final Results. No goodwill or intangibles are reported. 30 Jun 2026: total assets US$64,702k; liquid assets US$13,639k; equity US$60,569k; borrowings nil.

Cash flow

The consolidated cash flow statements are published in the full annual reports but were not available in the results announcements reviewed; OCF, capex and FCF are therefore left blank rather than estimated. Known capital outlays: FY2025 mining trucks US$5.0m, fund investment ~US$0.9m and dry-docking (amount not disclosed); HY2025 PPE additions US$1,862k; HY2026 PPE additions nil. FY2024 vessel swap: Diva acquisition (≥US$15.5m per MT Newswires; US$14.75m per TradeWinds) partly funded by the US$13.8m Zorina disposal. No buybacks or dividends in any year (results announcements).

Ratios (derived)

Cash conversion cycle: not meaningful/not disclosed (no inventory or payables days disclosed; trade receivables were nil or negligible until FY2025 when US$330k net, all aged over three months, after a US$188k impairment).

Commentary on trends, inflections and drivers

Earnings quality has been dominated by non-cash items. FY2021's US$10.5m profit was almost entirely a US$13.43m reversal of vessel impairment, partly offset by a US$5.36m credit-loss allowance on PRC developer bonds (Annual Report 2021). FY2022–FY2024 results were depressed by further bond ECLs (US$1.40m, US$1.15m, US$0.39m), vessel impairments (US$0.80m, US$1.01m) and the US$2.10m JV disposal loss. FY2025's US$0.36m loss was again driven by a US$1.275m vessel impairment and US$0.44m receivable impairment, against segment results of US$3.82m. Underlying shipping cash earnings (EBITDA ex-impairment) have been in a US$3–5m band.

Balance-sheet clean-up is complete. The group moved from US$15.9m of debt in 2020 to zero by end-2024 (finance costs fell from US$723k in FY2020 to US$17k of lease interest in FY2025). Legacy property, JV and bond exposures are gone. The trade-off is lower interest income (bank interest down 67% to US$253k in FY2025) as cash was redeployed into trucks, a fund and dry-docking.

FY2025 inflection in scale; HY2026 inflection in profitability. Revenue doubled in FY2025 on coal trading and rate renegotiation, but margins thinned. HY2026 delivered the first clean profit since FY2024 (US$1.79m; EPS US0.16 cents), driven by a 62% YoY rise in average BSI to US$14,917/day, higher utilisation, and absence of impairments (HY2026 Interim Results). Administrative expenses rose 50% to US$1.77m, reflecting the enlarged corporate structure under new ownership.

Management guidance: qualitative only — cautiously optimistic on medium-to-long-term dry bulk; focus in 2H2026 on geopolitics monitoring, fleet maintenance, cost reduction and utilisation; continued expansion of logistic transportation and trading via acquisitions. No numerical targets. Consensus: none.

Bull case

1. Deep value with a cash floor: indicative market cap of ~US$22.5m versus US$60.6m book equity and US$13.6m net cash; EV of under US$9m for three Supramaxes plus a truck fleet (derived from HY2026).

2. Operating leverage to freight: HY2026 showed segment profit of US$3.3m on a 62% BSI rise; if 2H2026 rates hold near HY2026 averages, FY2026 could deliver the best clean earnings in years.

3. Controller-driven growth: the 51.81% owner's coal and Mongolian networks have already added two revenue lines (trading volume +94% YoY in HY2026; land logistics profitable from inception).

Bear case

1. Cyclical and concentrated: three ships and ~72% customer concentration mean a single off-hire or a freight reversal (e.g., Hormuz reopening) could erase profits, as in HY2025 (loss US$1.71m).

2. Governance and minority-protection concerns: full board turnover, auditor resignation, related-party trading exposure and a controller who bought in at ~0.26x book; minorities may never see value surfaced via dividends.

3. Diversification may dilute returns: trading margins fell to 6.7% in HY2026 and overhead has more than doubled since FY2022; capital deployed into non-core assets (fund, trucks) has unproven returns.

Catalysts and monitorables (next 12 months): FY2026 results (expected March 2027) and any profit alert in early 2027; BSI trajectory and Middle East shipping-lane status; any vessel acquisition or fleet-expansion announcement; scale and margins of coal trading and Mongolian leasing; related-party transaction disclosures; first dividend declaration under new ownership; vessel impairment testing at year-end 2026; Interim Report 2026 detail on receivables and contract liabilities (US$3.03m of customer advances at 30 Jun 2026).

Analyst verdict. Courage Investment Group has completed a transition from a cluttered, loss-prone quasi-investment holding company into a debt-free, three-ship dry bulk owner bolted onto two nascent commodity-logistics businesses sponsored by a new controlling shareholder. The financial record is volatile and dominated by non-cash items: impairment reversals created the FY2021 profit, while bond credit losses, vessel impairments and a JV disposal loss drove FY2023's US$4.0m loss. Stripped of those, the shipping franchise generates a modest but real US$3–5m of annual EBITDA, and HY2026 showed what the fleet can earn in a firm market.

The equity is priced at roughly a third of book value and less than half an EV-to-sales turn, with cash covering around 60% of market capitalisation — a valuation that implicitly assigns little value to the ships and a governance discount to minorities. That discount is not irrational: the controller acquired control at HK$0.1094, a fraction of NAV; the board has been entirely replaced within 15 months; the long-standing auditor resigned in late 2025; and growth is being pursued through related-network trading with thin margins rather than through dividends. The business's scale leaves it fully exposed to freight cycles and to individual charterers.

On balance, the stock is a high-risk, asset-backed special situation rather than a quality compounder. The near-term earnings set-up is favourable given elevated Supramax rates, and the balance sheet removes solvency risk. Re-rating, however, likely requires evidence that management will allocate capital to minority benefit — accretive tonnage purchases at sensible prices, transparent related-party dealings, and a first dividend — rather than to sponsor-adjacent diversification. Absent those signals, the discount to NAV is likely to persist. Investors should weight position size accordingly and monitor FY2026 results, related-party disclosures and capital allocation decisions as the decisive tests.