A Look at 3 Important Coal Stocks – AQC, WHC, NHC

As per the International Energy Agency’s Global Energy and CO2 Status Report issued in March, global coal demand increased by 0.7% or 40 Mtce in 2018. The Asian demand growth was more than offset by declines in other parts of the world. Additionally, Chinese policies are more inclined towards supporting its substantial domestic coal industry. However, strong demand from other seaborne markets such as India, Japan, Taiwan and Korea, is expected to fill any demand-supply equation gap in the months ahead. Three important coal stocks are Australian Pacific Coal Limited, Whitehaven Coal Limited and New Hope Corporation Limited. Let’s see how the recent developments of these companies are impacting coal prices.

Australian Pacific Coal Limited (ASX: AQC)

Australian Pacific Coal Limited (ASX: AQC) has an engagement in the exploration, development and production activities at Queensland and New South Wales, Australia.

On July 2, 2019, AQC announced that certain conditions under the Share Sale Agreement with Stella Natural Resources (SNR) were not satisfied by SNR by 1st July 2019, which was the cut-off date for satisfaction of the agreement conditions. Subsequently, Share Sale Agreement has been terminated by Australian Pacific Coal effective on July 4, 2019. On August 6, 2018, to form the Dartbrook JV, AQC entered into a binding transaction agreement with a subsidiary of Stella Natural Resources.

The company is also in dialogues with other potential players for recommencing underground mining at Dartbrook. AQC kept all options open and intends to maintain an open dialogue with Stella Natural Resources. One of company’s important shareholders, Trepang Services Pty Ltd confirmed its commitment towards the company for any further funding support. At present, the total unsecured loan before any further drawdowns from Trepang is $3.5 Mn.

March ‘19 Quarter Performance Highlights: The net cash outflow from the operating activities for the period was $2.08 Mn. The net cash inflow from the financing activities was reported at $1.66 Mn. The net cash and cash equivalents at the end of quarter period were $0.57 Mn.

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Net Operating Cash Flow Data (Source: Company Reports)

On the stock information front, at the time of writing on July 3, 2019 (AEST 2:26 PM), the stock of AQC is trading at a price of $0.475, with a market capitalisation of ~$25.24 Mn. Today, it reached day’s high at $0.510 and touched day’s low at $0.475, with a daily volume of 14,341. Its 52 weeks high and low price stands at $1.095 and $0.460, with an average volume of 13,846 (yearly). Its absolute returns for the past one year, six months and three months are -24.24%, -28.57%, and -15.25%, respectively.

Whitehaven Coal Limited (ASX: WHC)

Whitehaven Coal Limited (ASX: WHC) has an engagement in the development and operation of coal mines in New South Wales. On June 19, 2019, WHC announced a change in the interest of one of its substantial holders, wherein Lazard Asset Management Pacific Co increased its voting power from earlier 6.39% to 7.78% effective from June 17, 2019. The company’s another substantial holder, BlackRock Group disposed all its shares in the WHC effective from June 12, 2019.

March’19 Quarter Key Highlights: WHC reported a decent safety performance with group TRIFR (total recordable injury frequency rate) of 8.3 at the end of the period. Its managed Run-of-Mine (ROM) coal production for the period decreased by 17% from 5.91 Mn tonnes in March ‘18 quarter to 4.88 Mn tonnes in March ‘19 quarter. Its managed saleable coal production decreased by 3% from 5.24 Mn tonnes in March’18 quarter to 5.06 Mn tonnes in March ‘19 quarter. The total managed coal sales increased by 12% from 5.41 Mn tonnes in March ‘18 quarter to 6.04 Mn tonnes in March ‘19 quarter.

March ‘19 Quarter Production and Sales Data (Source: Company Reports)

FY2019 Production Guidance: WHC’s ROM coal production guidance has been revised from previous 22.0-23.2 Mt to 21.8-22.8 Mt. Production at the Maules Creek has been revised from previous 11.8-12.2 Mt to 11.6-11.8 Mt. The saleable coal production guidance has been revised from previous 21.5-22.5 Mt to 20.5-21.0 Mt.

Revised FY19 Production Guidance Data (Source: Company Reports)

On February 15, 2019, WHC published its H1 FY19 report.

On the stock information front, at the time of writing on July 3, 2019 (AEST 2:45 PM), the stock of Whitehaven Coal is trading at a price of $3.635, with a market capitalisation of ~$3.75 Bn. Its PE multiple for trailing 12 months was reported at 6.280x. Its dividend yield is reported at 7.95%, with earnings per share of 0.581 AUD. Today, it reached day’s high at $3.660 and touched day’s low at $3.610, with a daily volume of 3,709,095. Its 52 weeks high and low price stands at $5.736 and $3.530, with an average volume of 7,228,252 (yearly). Its absolute returns for the past one year, six months and three months are -35.50%, -13.18% and -11.84%, respectively.

New Hope Corporation Limited (ASX: NHC)

New Hope Corporation Limited (ASX: NHC) has an engagement in the coal exploration and project development in Queensland, coal extraction and processing in Queensland and New South Wales, marketing and logistics, agriculture and oil and gas exploration, development, production and processing. On June 7, 2019, NHC’s substantial holder, Perpetual Limited and its related bodies disposed all its stake in the company, effective from June 5, 2019.

April’19 Quarter Key Highlights: NHC’s total saleable coal production increased by 39% from 2.10 Mn tonnes in April ‘18 quarter to 2.91 Mn tonnes in April ‘19 quarter. The saleable coal production at QLD (100% owned and operated) increased by 1% from 1.22 Mn tonnes in April ‘18 quarter to 1.23 Mn tonnes in April ‘19 quarter. The saleable coal production at NSW (80% owned and operated) increased by 90% from 0.89 Mn tonnes in April ‘18 quarter to 1.69 Mn tonnes in April ‘19 quarter. NHC’s total coal sold for the period increased by 61% from 1.90 Mn tonnes in April ‘18 quarter to 3.07 Mn tonnes in April ‘19 quarter. The QBH export throughput increased by 11% from 1.50 Mn tonnes in April ‘18 quarter to 1.65 Mn tonnes in April ‘19 quarter.

April ‘19 Quarter Production Data (Source: Company Reports)

H1 FY19 Performance Highlights: Revenues from operations increased by 21% to $617 Mn as compared to the previous corresponding period. The EBITDA for the period (before non-regular items) increased by 31% to $285 Mn as compared to the previous corresponding period. The profit before and after income tax (before non-regular items) increased by 33% to $229 Mn and 33% to $160 Mn, respectively as compared to the previous corresponding period. The Board of Directors determined an interim dividend of 8 cents per share, an increase of 33% as compared to the previous corresponding period.

H1FY19 Key Metrics (Source: Company Reports)

On the stock information front, at the time of writing on July 3, 2019 (AEST 2:45 PM), the stock of New Hope was trading at a price of $2.770, with a market capitalisation of ~$2.33 Bn. Its PE multiple for trailing 12 months was reported at 15.140x. Its annual dividend yield is reported at 5.71%, with earnings per share of 0.185 AUD. Today, it reached day’s high at $2.840 and touched day’s low at $2.730, with a daily volume of 1,214,578. Its 52 weeks high and low price stands at $4.500 and $2.525, with an average volume of 2,097,618 (yearly). Its absolute returns for the past one year, six months and three months are -10.26%, -14.89%, and -4.76%, respectively.


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