On the other hand, he is assuming FY2025 earnings 10% lower than earlier projected due to coal prices that are trending lower from his forecast.
For now, Chew, in his Sept 4 note, is keeping his "buy" call and target price of 47 cents.
For the half year ended June, Geo Energy reported adjusted patmi of US$20 million, up 140% y-o-y, thanks to a 144% jump in production to 6.6 million metric tonnes.
Chew warns that coal prices, which are now at US$42 per tonne, are likely to drop further in the current 2HFY2025. In 1HFY2025, the average was US$47.9 per tonne.
He expects Geo Energy to produce 11.2 million tonnes for the whole of FY2025, within the company's own guidance of between 10.5 million and 11.5 million tonnes.
Meanwhile, the construction of the company's 92-km-long hauling road and jetty is likely to be completed by next year, which is within schedule.
When the road is completed, coal production at the TRA mine can then be increased to 25 million tonnes per year by 2028, which means more revenue.
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Separately, in an interested party deal, Geo Energy plans to buy over 51% of two barging companies partly owned by its own chairman Charles Antonny Melatai.
Geo Energy plans to pay US$128 million in a combination cash, shares and assignment of debtors, which, at a 33x historical P/E, is "not inexpensive".
The deal requires the approval of other shareholders.
Chew views this deal as "strategic", as Geo Energy would right away have access to the tugs and barges as well as the operational expertise and of course, the "huge profit opportunity" moving the expected increase in the volume of coal next year.
Chew assumes each 7,500-tonne capacity barge can fetch a rate of US$5.60 per tonne, with each barge making 60 trips a year, the annual revenue per set of tug and barge will be around US$2.5 million.
Assuming a 25% net margin, that translates into earnings of US$625,000 each, and all 27 tug and barge sets will generate US$17 million, valuing the acquisition at 14x earnings.
"The considerable upside optionality is when the fleet scales to 100 sets to ship 45mn MT of coal per year by 2028/29," says Chew.
Geo Energy Resources shares changed hands at 42.5 cents as at 10.52 am, up 8.97% for the day.
