Universal Coal PLC (ASX: UNV) Estimated 29% Rise in FY19 EBITDA to $93 Mn

Universal Coal PLC

As compared to the previous year, Universal Coal PLC (ASX: UNV) has forecasted that there will be an increase of EBITDA by 29%. The contract price and the estimated cost for FY2019 will be subjected to the international coal pricing and foreign exchange. The company commits its dividend policy to be progressive in nature. There is an increase in the sales tonnages by 28% as compared to the previous year. The increased sales were 6Mtpa. The sales at the Kangala colliery is steady and is 2.4Mtpa. There is an increase in sales from the New Clydesdale Colliery (NCC) by 29% representing 2.7Mtpa has gone up as compared to the previous year. The inclusion of the North Block complex (NBC) is a subject to its final acquisition. The inclusion of the resource Paardeplaats will be after the regulatory approval. The development of the Eloff Project will have a significant impact in the extension in a life of Kangala Colliery mines. This project has potential that it can double the production of the Kangala Colliery. It is expected that the development of Brakfontein project will deliver additional 1.2Mtpa. 

As per the company’s estimation amount worth A$12 million is required for maintaining the capital expenditure and improvement of work in the mines for the two existing Collieries and the North Block Complex for the current operation. There might be a further capital requirement in the transition of colliery to the Universal Coal. The export coal pricing is currently at a satisfactory level and this has made the company use the pricing to forecast for FY2019. There is a huge demand for thermal coal in South Africa for which they have made a long-term agreement with the Eskom Coal Supply.

Universal is successful in delivering the coal need on demand. The Company is hopeful that in FY2019, it will be able to deliver a high volume of thermal coal. Based on the audited figures of FY2018, the company forecasts an EBITDA to increase by 29% representing A$93 million. Based on the company’s value added in the production, the Company has been committed to deliver and return value to shareholders by means of both organic and through funded acquisition and also maintaining regular progressive dividend payments. The company like the previous year FY2018 wants to maintain its profile of distributing dividends to its shareholders which were 45% of attributable net profit after tax. Universal coal has also received a conditional, non-binding indicative offer (NBIO) from the association of investors (Consortium) which is being headed by a private entity based in South Africa by the name Ata Resources Proprietary Limited (or Ata Resources).

The company has shown a positive performance throughout its journey. The performance since its inception was 15.38%. The 6 months, YTD, 1 year and 5 years performances are 46.34%, 62.16%, 46.34%, and 233.33%. For the year ended 30 June 2018, the company has made an operating profit of A$52.755 million. The net profit during the period was A$35.972 million. The company has total assets worth A$264.593 million and total liabilities worth A$ 126.660 million indicating companies potential to clear its long-term obligations. The total current asset of the company is A$3.666 million and total current liabilities is A$10.979 million indicating that the company is not able to clear its short-term obligations. The total shareholder’s equity is worth A$137.933 million.

The current market price of the share is A$0.300 (AEST 4 pm) with a market capitalization of A$156.74 million with PE ratio of 6.54x. As per the chart, we see that the moving average convergence and divergence line has already cut the signal line from the top on 1 October 2018 and is continuously moving towards the downward direction. This indicates the price to be bearish in nature.

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