Whitehaven Releases BMO 28th Global Metals and Mining Conference Presentation

Mining

Whitehaven Coal Limited (ASX: WHC) has presented the company’s performance and its outlook at BMO 28th Global Metals and Mining Conference.

Currently, the company is having operations in Narrabri U/G mine, Maules Creek, Werris Creek, Tarrawonga, Rocglen and Sunnyside O/C mines. In FY2018, the company produced 20.9 Mt saleable coal and aims to grow it to 26 Mt by FY 2022 and additionally, its project pipeline of Vickery and Winchester South will add production over the next 5 years to 10 years. Its unit cost of coal stood at A$69/t (<US$50/t) in H1 FY2019 and is expected to decline in the future. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

As per its H1 FY2019 highlights, the company reported Equity coal sales of 8.4 Mt including purchased coal. Its first-half net profit increase by 19% to A$305.8 Mn from A$256.2 Mn in the prior period, EBITDA increased by 12% to A$550.8 Mn from A$493.7 Mn in the prior period. The company reported cash flow from operating activities of A$463.7 Mn in 1H Fy19 from A$442.6 Mn in the prior period.

The company’s board declared an interim & special dividend totalling A$0.20 per share, an increase of 54% from A$0.13 per share in the prior period. The Unit cost per tonne of coal also increased to A$69/t from A$57/t as compared to the previous period.

Its net debt was reported at A$244 Mn on December 31, 2018 as compared to A$270 Mn on June 31, 2019. Its gearing stood at 7% in both the half-year period of CY 2018. On the safety margin, the company reported TRIFR of 7.6 on December 31, 2019 slightly higher than pcp and well below NSW average.

Whitehaven reported Managed coal sales of 10.3 Mt including purchased coal for the year. Taiwan’s demand for higher quality coal continues to grow as it uses Whitehaven product to reduce carbon emissions. In Japan, coal is still expected to be generating 25% of the country’s electricity in 2030 as per the IEA (International Energy Agency). Whitehaven’s sales are growing into India, Malaysia, Indonesia, Vietnam and the Philippines as the economies in these countries are growing strongly.

In coal’s outlook, Whitehaven highlighted IEA new policies scenario (NPS) report where World energy demand is expected to increase by about 27% from 2017 to 2040, World energy demand met by fossil fuels is expected to increase from 11,292 Mtoe in 2017 to 13,139 Mtoe in 2040, and World energy demand met by coal increases by about 2% between 2017 and 2040.

The IEA projects Australia will grow its exports by around 22% from 350 Mtce in 2017 to 428 Mtce by 2040. It also expects Indonesian exports to decline as the quality of its coal deteriorates and more coal is consumed domestically to generate electricity.

Additionally, there will be a focus on upgradation of power plants worldwide where deployment of supercritical and ultra super critical (HELE) power stations and the retirement of older subcritical plants are under process. The HELE technology is expected to reduce carbon emissions by burning coal more efficiently and producing more electricity per unit of coal consumed when compared to the efficiency of subcritical power stations.

WHC last traded at A$4.440, up by 0.68% with a market capitalisation of circa ~A$4.52 Bn as on 26 February 2019 (AEST 2:58 PM). Its current PE multiple is at 7.59x. Its 52 weeks high has been reported at A$5.736 and low at A$3.924. Its absolute return for the last 3 months, 1 year, and 5 year are 8.21%, 7.38%, and 177.16% respectively.


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