What will
-Focus on Bengalla as New Acland on care & maintenance pending court hearing
-New Hope's cash bank spurring acquisition speculation
-Current share price suggests the market is expecting a correction in thermal coal
Cash is flowing for
No guidance was offered for FY22 yet Citi highlights the company generated more than
New Hope has transferred its excavator to Bengalla from New Acland to provide additional mining capacity. The mine has permits for up to 15mtpa run-of-mine capacity and the company will focus on product quality, not output. Bengalla has a low-cost position and Citi forecasts run-of-mine production in FY22 of 13mt. Morgans expects Bengalla will generate
Recent market dynamics have meant Credit Suisse has raised its forecast for thermal coal to
New Acland aside, Macquarie continues to be impressed with Bengalla and expects there is material upside at spot prices, currently around
Macquarie calculates the New Hope share price is currently pricing in a thermal coal price of
In explanation, Macquarie points out the current price of the shares suggests the market is expecting correction in thermal coal prices, yet there is a risk prices remain higher for longer and earnings momentum continue. Nevertheless, the broker is cautious about the longer-term aspects of thermal coal.
As an interesting contrast, Macquarie notes the company's rehabilitated sites continue to increase its exposure to pastoral land. Cattle prices have increased 40%, New Hope has pointed out, expecting further yields and efficiencies in both livestock and cropping.
Goldman Sachs flags the risk that, with thermal coal use for power generation, New Hope customers could look to diversify their energy mix and thus weaken demand for coal. Meanwhile, with operations in
M&A
FY21 results were largely in line with forecasts, with underlying EBITDA of
If the gearing ratio were to ratchet up to 15% versus the 4% in FY21, the broker assesses a
Management emphasises it will only consider assets that are at the low end of the cost curve, value accretive and with long-range approvals to operate. Citi observes, given the criteria, an acquisition could be outside
Yet Morgans believes the probability of New Hope acquiring
New Acland
New Acland stage 2 will be put on hold and the future of stage 3 is unknown, awaiting a hearing in the Land Court in November, although the company is still confident it will eventually be approved.
Citi is not so sure and Macquarie does not forecast New Acland stage 3 will be developed. Morgans believes a positive recommendation being put to the minister would be a bonus in terms of its view on the stock, as the project is not incorporated in valuation.
Goldman Sachs, not one of the seven stockbrokers monitored daily on the FNArena database, has a Neutral rating and
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