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Edison remains in Top Utilities Sector & Win Regulatory Support

and operating challenges for utilities like Edison International. But California’s aggressive clean energy goals also offer Edison more growth opportunities than most utilities. Edison’s plans for $5 billion of annual capital investment and good regulatory support will generate 6% annual earnings growth beyond 2021. But this growth trajectory could be lumpy as regulatory delays, wildfire issues, and California energy policy changes lead to shifts in spending and cost recovery. 

New equity issuances in 2019 and 2020 in part to fund its $2.4 billion contribution to the state wildfire insurance fund and a higher allowed equity structure in rates weighed on earnings the last two years. But Edison now has most of its financing in place to execute its large growth plan, which ultimately will drive earnings and dividend growth.

Growth opportunities at Southern California Edison address grid safety, renewable energy, electric vehicles, distributed generation, and energy storage. Wildfire safety investments alone could reach $4 billion during the next four years. In August, regulators approved nearly all of Edison’s 2021-23 investment plans. Ongoing regulatory proceedings will address wildfire-specific investments and Edison’s 2024 investment plan. 

Financial Strength

Edison’s credit metrics are well within investment-grade range. California wildfire legislation and recent regulatory rulings have removed the overhang that threatened Edison’s investment-grade ratings in early 2019. Edison has kept its balance sheet strong with substantial equity issuances since 2019. Edison issued $2.4 billion of new equity throughout 2019 at prices in line with our fair value estimate. This financing supported both its growth investments and half of its $2.4 billion contribution to the California wildfire insurance fund. The new equity in 2019 also allowed Southern California Edison to adjust its allowed capital structure to 52% equity from 48% equity for ratemaking purposes, leading to higher revenues and partially offsetting the earnings dilution. The board approved a $0.10 per share annualized increase, or 4%, for 2021, the same increase as it approved for 2020. 

Bull Says

  • With some $5 billion of planned annual investment during the next four years, it is projected 6% average annual average earnings growth in 2021-24.
  • Edison has raised its dividend from $1.35 annualized in 2013 to $2.65 in 2021, demonstrating management’s commitment to meeting and maintaining a 45%-55% target payout ratio on utility earnings.
  • California’s focus on renewable energy, energy storage, and distributed generation should bolster Edison’s investment opportunities in transmission and distribution upgrades for many years.

Company Profile

Edison International is the parent company of Southern California Edison, an electric utility that supplies power to 5 million customers in a 50,000-square-mile area of Southern California, excluding Los Angeles. Edison Energy owns interests in nonutility businesses that deal in energy-related products and services. In 2014, Edison International sold its wholesale generation subsidiary Edison Mission Energy out of bankruptcy to NRG Energy.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Following strong first-half results, the Oil Search dividend has been reinstated.

Investment thesis

  • Positive trends in the sale of Alaskan equity interests.
  • Following the recent capital raising, the balance sheet is in good shape. More deleveraging will be beneficial as well.
  • Globally appealing assets with a favourable cost structure.
  • Although expensive, downside hedges to lower oil prices are a good thing in the event of a black swan event.
  • Possible M&A activity.
  • Rising oil and gas prices

Key Risks

The following are the key challenges to the investment thesis:

  • Global oil and gas markets are experiencing a supply and demand imbalance.
  • Lowering of oil and LNG prices.
  • Disruptions in production.
  • Execution risk associated with LNG expansion.
  • Adverse policy changes in PNG (the government is a major backer of the project).

Highlights of key FY21 results

  • Revenue of $667.7 million was up +7% as the oil and LNG markets recovered from the initial effects of Covid-19 (average oil and condensate realisation of $64.66 was up 80% over the pcp). Total production was 13.5 million metric tonnes, a -8 percent decrease from 14.5 million metric tonnes. 
  • EBITDAX of $488.8 million increased by 8%.
  • Core EBIT of $278.8 million increased by 88 percent. OSH is on track to achieve a 40% reduction in underlying operated opex by 2023. Free cash flow increased significantly to $284.3 million (up from $12.8 million in 1H20). 
  • OSH made a revenue of $139.0 million, a huge improvement over the -$266.2 million reported in 1H20. Given the LNG price lag to Brent, management expects solid operating cashflows to continue in 2H21.
  • Net debt fell -11 percent to $2,122.2 million. Gearing was reduced from 29.9 percent to 27.2 percent in the pcp. Under financial covenants, OSH has significant headroom, according to management. 
  • The Board declared an interim dividend of US3.3 cents per share, representing a payout of 49 percent of NPAT and consistent with OSH’s dividend policy of a target payout ratio of 35 to 50 percent of core NPAT.

Company Description  

Oil Search Limited (OSH) explores for and produces gas and oil through operations in Papua New Guinea. The company’s activities are located in the Papuan Highlands which include Kutubu, Hides, and Gobe oil and gas projects.   

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Ampol in Proposed Merger With Z Energy

Annual refining capacity fell by half to 6.0 billion litres, about one third of company marketed volumes, when Kurnell closed. Kurnell refinery was shut in 2014 because of operational issues and unfavourable demand for the product mix. It was built to produce petrol, but the market has moved increasingly to diesel with advancing engine technology. Strong growth in transport fuels reflects favourable market attributes. Pandemics notwithstanding, volumes in the Australian liquid fuels market grow at close to growth rates in gross domestic product, with solid increases in diesel and jet fuel consumption offsetting a slow decline in petrol.

Ampol’s extensive network and comprehensive product offerings provide some competitive advantage. The closure of refining sees Ampol’s business rest largely on fuel distribution. In this space, it wrestles with expert competition in BP, Shell, and Mobil. Potential long-term threats include substitution of diesel for alternative fuels such as liquid natural gas, or LNG, and electricity. In the case of LNG in particular, Ampol is likely to participate in any shift via its logistics network and filling stations. Ampol maintains a market-leading 35% share of all transport fuels sold. Ampol substantially rests on its competitive supply chain now that Kurnell has been converted into an import terminal.

Financial Strength 

Ampol is proposing an NZD 3.78 per share cash offer for Z Energy via scheme of arrangement. Ampol intends to fund the acquisition in accordance with its existing capital allocation framework, including an adjusted net debt/EBITDA target of 2.0-2.5 times. It says it will use new debt facilities, proceeds from any divestments, and an equity issuance in the order of AUD 600 million. Ampol may have to sell-down some NZ assets to meet NZ competition guidelines. This could include its Gull network.Z had NZD 608 million net debt at end March 2021, net debt/EBITDA of 2.67 quite high versus Ampol’s AUD 735 million at end June 2021, but this in the context of a low growth company focused on yield. Ampol’s standalone leverage is conservative at 18.6% and annualised first half net debt/EBITDA is just 0.8.

Our fair value estimate for Ampol by 9% to AUD 31.00. The increase is in accord with the terms of a proposed merger and our prior stand-alone fair value estimates. Merger and acquisition activity continues at a frenetic pace in the Australasian fossil fuel space, coronavirus fragility and carbon concerns marking some as prey. The latest is apparently the fourth in a series of nonbinding offers from Ampol, including at NZD 3.35, NZD 3.50 and NZD 3.60 along the way. And there is logic to a merger– Ampol and Z have very similar business models. 

Z Energy’s board wouldn’t have opened the books if the chance of a deal proceeding was low. At NZD 3.78 Ampol will be getting Z Energy at a material 33% discount to our NZD 5.60 standalone fair value. This accounts for the 9% Ampol fair value uplift. On a stand-alone basis, our AUD 28.50 stand-alone fair value estimate for Ampol is unchanged. Ampol intends to fund the acquisition in accordance with its existing capital allocation framework, including an adjusted net debt/EBITDA target of 2.0-2.5 times. It says it will use new debt facilities, proceeds from any divestments, and an equity issuance in the order of AUD 600 million.

Bulls Say’s

  • Group returns on invested capital improved materially with the closure of the high-cost Kurnell refinery and the
  • modernisation of Lytton refinery. Quarantining of refinery losses and redirection of free cash flow to marketing and distribution drove the improvement.
  • Dismantled refining leaves Ampol reliant on third parties for two thirds of its fuel requirement and removes an inbuilt hedge, albeit an unprofitable one in some prior years.
  • Ampol wrestles with formidable competition in BP, Shell, and Mobil in the distribution and retail sector.

Company Profile 

Ampol (nee Caltex) is the largest and only Australian-listed petroleum refiner and distributor, with operations in all states and territories. It was a major international brand of Chevron’s until that 50% owner sold out in 2015. Caltex transitioned to Ampol branding due to Chevron terminating its licence to use the Caltex brand in Australia. Ampol has operated for more than 100 years. It owns and operates a refinery at Lytton in Brisbane, but closed Sydney’s Kurnell refinery to focus on the more profitable distribution/retail segment.

(Source: Morningstar)

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Vipers updated Fair Value Estimate increased to $21

and the announced Swallowtail acquisition, the fair value estimate of the company increased to $21 per unit while maintaining its narrow moat rating. With second-quarter results, Viper boosted its 2021 production guidance by 2% at the midpoint to just over 26,000 barrels of oil equivalent per day, mainly due to higher activity levels from third-party private operators versus public operators such as Diamondback.

After essentially halting acreage acquisitions in May 2020, Viper has returned to the M&A market with a large transaction. The deal is a $500 million cash and stock (55% stock, 45% cash) purchase of 2,302 net royalty acres in the Midland basin from Swallowtail Royalties, a private mineral rights firm where its acreage deals are financed by Blackstone funds. The price on a per acre basis is at over $200,000 per acre, roughly 80% higher than historical pricing and 40% higher than its last significant deal activity in May 2020.

Despite the high per-acre price, Viper has advantages, as 65% of the acres are operated by Diamondback with a net royalty rate of 3.6%. The value of the deal is demonstrated by the fact that Viper was able to offer a clear long-term growth trajectory for its Diamondback acres, substantially reducing uncertainty around future cash flows, but it wasn’t able to do the same for its non-Diamondback acres.

Company’s Future Outlook

The deal is expected to be completed by the early fourth quarter, and expected post-deal leverage will be about 2 times, which is considered reasonable. The Diamondback development plan is essentially minimal production today to 1,000 barrels of oil per day (bo/d) in 2022 to over 5000 bo/d by 2024. It is expected that this path to generate a solid amount of value for Viper.

Company Profile
Viper Energy Partners was formed by Diamondback Energy in 2014 to own mineral royalty interests in the Permian Basin. It is publicly traded Delaware limited partnership formed by Diamondback to own and acquire mineral and royalty interests in oil and natural gas properties primarily in the Permian Basin. Since May 10, 2018, the company has been treated as a corporation for U.S. federal income tax purposes. At the end of 2020, Viper owns 24350 net royalty acres that produced 26551 boe/d. Proved reserves are mostly oil, and at the end of 2019 stand at 99392 mboe.

(Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Newcrest Mining’s Strong Financial Performance For FY21

Investment Thesis 

• The present share price is trading at a more than 10% discount to our equal weighted (DCF, PE-Multiple, EV / EBITDA) valuation of NCM.

• Among gold mining peers in Australia, NCM has one of the lowest cost bases.

• NCM has one of the lowest cost bases among gold mining peers in Australia. The sustained cost outs will lower the All-in Sustaining Cash Cost (AISC), subject to currency fluctuations (AUD).

• Commodity prices (gold and copper) surprise on the upside, owing to geopolitical worries.

• Leveraged to global monetary policy decisions and the USD, which we view appreciating against other currencies, notably the Australian dollar. 

• NCM has organic development options at Lihir, Cadia, and Golpu.

• NCM offers expansion opportunities at Havieron and Red Chris.

• Strong assets with a lengthy reserve life.

• A solid management team with significant mining expertise.

Key Risks

• Further weakening global macroeconomic conditions.

• A decrease in the group’s output profile.

• Reduced free cash flow means the company will fail its dividend projections.

• A worsening in the global supply and demand equilibrium.

• A decline in gold and copper prices.

• Production difficulties, execution risk, delay, or unscheduled mine shutdown.

• Negative fluctuations in the AUD/USD.

FY21 results summary

Actual earnings of $1,164 million climbed +55 percent year on year, owing to higher realised gold (up +17 percent year on year) and copper (up +42 percent year on year) prices, favourable fair value adjustments recognised on copper derivatives, and other factors, NCM’s investment in the Fruta del Norte finance facilities, and record copper production from Cadia, partially offset by lower gold sales volumes due to lower production (down -3.6 percent year on year), increased income tax expense as a result of the Company’s improved profitability, the unfavourable impact on operating costs (including depreciation) from the strengthening of the AUD against the USD, additional costs associated with COVID-19 measures ($70 million), higher treatment, refining, and transshipment costs and higher Price linked costs such as royalties. Record FCF of $1,104m was mainly due to to pcp, which was characterised by a net cash outflow of $1,291m relating to M&A growth investments, compared to a $21m outflow in the current period (FCF before M&A activity was $455m, +68% higher than pcp, with higher operating cash flows only partially offset by increased investment in major capital projects at Cadia, Increased production stripping activity at Lihir and Red Chris, as well as higher sustaining capital at all ongoing operations).

Company Description 

Newcrest Mining Limited (NCM)engages in the exploration, mine development, mine operation, and the sale of gold and gold/copper concentrates. It is also involved in the exploration of silver deposits. The company primarily owns and operates mines and projects located in Cadia and Telfer in Australia; Lihir based in Papua New Guinea; Gosowong based in Indonesia; Bonikro based in Cote dIvoire in West Africa.

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Murphy Using Windfall from High Oil Prices to Accelerate Deleveraging

spinning off its retail gas and refinery businesses. Historically, the company’s capital efficiency was skewed to the weaker end of the peer group range, even after this transformation, but management has since narrowed the gap by downsizing the portfolio and shifting capital toward higher-margin projects.

The firm is a top-five producer in the Gulf of Mexico, and the region accounts for almost half of its production. It signed a joint-venture agreement with Petrobras in late 2018, giving it an 80% stake in the combined assets of the two companies. Murphy has a number of expansion projects lined up there that should offset legacy declines and enable it to hold production flat in the next few years. There is regulatory risk, though: U.S. President Joe Biden has pledged to halt offshore oil and gas permitting activity (to demonstrate his climate credentials). 

 Like other shale producers, the firm has made considerable progress cutting costs and boosting productivity since the post-2014 downturn. However, while the firm still has over 1,400 drillable locations in inventory, fewer than 350 of them are in the prolific Karnes County area. When this portion is exhausted, well performance, and thus returns, could deteriorate. 

Financial Strength

The COVID-19-related collapse in crude prices during 2020 has taken its toll on most upstream oil firms, and Murphy has seen its leverage ratios tick higher as well. At the end of the last reporting period, debt/capital was 40% and net debt /EBITDA was 2.37 times. The firm currently holds about $2.8 billion of debt, and has roughly $1.7 billion in liquidity ($200 million cash and about $1.5 billion undrawn bank credit). The term structure of the firm’s debt is reasonably well spread out, and only about 20% of the outstanding notes come due before 2024 (the firm has maturities totaling $500 million in 2022). Murphy is likely to generate free cash flows of at least $100 million-$150 million in 2021 and 2022, based on strip prices, and its potential for generating free cash should increase further in 2023 (when some of the firm’s longer-term investments in the Gulf of Mexico start producing oil and contributing to cash flows). So the firm should have no issues covering the 2022 notes with cash, but if the operating environment deteriorates, management could always try to refinance the 2022 notes or lean on the revolver.

Bulls Say

  • The joint venture with Petrobras is accretive to Murphy’s production and generates cash flows that can be redeployed in the Eagle Ford and offshore.
  • The Karnes County portion of Murphy’s Eagle Ford acreage offers economics that are as good as or better than any other U.S. shale.
  • Murphy’s diversified portfolio gives it access to oil and natural gas markets in several regions, insulating it to a degree from commodity price fluctuations or regulatory risks.

Company Profile

Murphy Oil is an independent exploration and production company developing unconventional resources in the United States and Canada. At the end of 2020, the company reported net proven reserves of 715 million barrels of oil equivalent. Consolidated production averaged 174.5 thousand barrels of oil equivalent per day in 2020, at a ratio of 66% oil and natural gas liquids and 34% natural gas.

 (Source: Morningstar)

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Stronger iron ore and copper prices, contributed to the strong earnings results for BHP.

Investment Thesis 

  • BHP is trading at fair market value but with an attractive dividend yield, according to our blended valuation (consisting of DCF, PE multiple, and EV/EBITDA multiple).
  • Commodity prices, particularly iron ore prices, have fallen as a result of lower Chinese demand.
  • In the absence of growth opportunities, focus on returning excess free cash flow to shareholders (hence the solid dividend yield).
  • Quality assets with a low cost structure and a dominant market position.
  • China’s growth rate outperforms market expectations.
  • In the medium to long term, management favours oil and copper.
  • A strong balance sheet position.
  • Continued emphasis on productivity gains.

Key Risks

We see the following key risks to our investment thesis: 

  • Poor implementation of corporate strategy.
  • If the coronavirus is not contained, it will have a long-term impact on demand.
  • Global macroeconomic conditions have deteriorated.
  • The global iron ore/oil supply and demand equation has deteriorated.
  • Price declines in commodities.
  • Production halt or unplanned site shutdown
  • AUD/USD fluctuation

Investment in the Jansen Stage 1 potash project:-

BHP has approved US$5.7 billion in capital expenditures for the Jansen Stage. 1. Potash exposure, according to management, provides increased leverage to key global megatrends such as growing population, alternative chosen, emissions reductions, and improved environmental stewardship. BHP expects Jansen S1 to generate 4.35 million tonnes of potash per year, with first ore expected in CY27 (construction to take six years, followed by a two-year ramp up). “At consensus prices, the go-forward investment in Jansen S1 is anticipated to produce an internal rate of return of 12 to 14 percent, a payback period of seven years from first production, and an underlying EBITDA margin of 70 percent,” management stated. Surprisingly, BHP evaluated the carrying value of its current potash asset base and recognised a pre-tax impairment charge of US$1.3 billion (or US$2.1 billion).

Company Description  

BHP Group Limited (BHP) is a diversified global mining company, with dual listing on the London Stock Exchange and Australia Stock Exchange. The company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate. The company also has petroleum exploration, production and refining.

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Spark Directors Recommend Takeover Offer

Graphic of investment stock market data analysis business

Australian regulated electricity distribution networks, and 15% of a major electricity transmission network. Citi Power and Powercor are two of five electricity distributors in Victoria, while SA Power Networks is the sole electricity distributor in South Australia. Trans Grid is the major electricity transmitter in New South Wales. 

The Victorian networks contribute just under half of EBITDA, with 40% from South Australia and the remainder coming from Trans Grid. Regulated tariffs account for 80%-90% of group revenue, with unregulated and semi regulated services accounting for the balance. Semi regulated services include public lighting and meter reading. Unregulated services include services on other owners’ networks, asset rentals, and facilities access. These operations are generally higher-margin and more volatile. 

Spark is a solid company, with investments in Australian electricity distribution networks generating highly secure cash flow under a transparent regulatory regime. This is a major headwind for earnings. Capital expenditure on upgrading and expanding networks adds to the regulated asset base and helps revenue growth in the long term. EBITDA margins were solid at 71% in 2020. The main determinant of margins is the favorability of regulatory decisions.

Financial Strength

Spark Infrastructure is in sound financial health. Spark carries a high debt load, as do other regulated utilities. This should be manageable because of highly secure revenue, except in a severe credit crisis. Credit metrics are likely to deteriorate because of regulatory pressure on returns but should, on balance, remain reasonable. Leverage, measured as net debt/regulated asset base, was 72% for VPN and 74% for SAPN in December 2020. This is above some peers; however, this metric understates these assets’ financial strength, given material unregulated revenue streams. Trans Grid is more heavily geared, with net debt/regulated and contracted asset base of 81%. 

Bull Says

  • Revenue is highly secure between regulatory resets, underpinned by regulated tariffs and defensive volume.
  • Lower interest rates and cost-saving programs are helping offset lower returns.
  • core assets have a debt-funding cost advantage because of a halo effect from majority owner Cheung Kong Infrastructure.

Company Profile

Spark Infrastructure Group (ASX: SKI) owns 49% interests in three electricity distribution companies: Powercor, servicing western suburbs of Melbourne; Citi Power, servicing Melbourne’s inner suburbs and central business district; and SA Power Networks, servicing South Australia. Powercor and Citi Power are collectively known as Victoria Power Networks. It also owns 15% of Trans Grid, the main electricity transmission network in New South Wales. The assets are heavily regulated, falling under the purview of the Australian Energy Regulator.

 (Source: Morningstar)

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Record Profit for Newcrest Mining Sees it in Strong Financial Shape for New Developments

The improvement was principally driven by commodity prices, with the realised gold and copper prices up 17% and 42%, respectively. Production guidance for fiscal 2022 of about 1.9 million ounces of gold and 125,000 to 130,000 tonnes of copper was basically as we expected but cost guidance is a bit higher but not sufficiently to warrant a fair value estimate change and thus we retain its share fair value estimate at AUD 29.50 per share 

Newcrest is in very strong financial shape post the record profit. We also think the company has a decent suite of development projects with life extensions likely at Cadia and Lihir, and development of Havieron and Red Chris looking likely. Newcrest remains one of our better value picks among generally overvalued miners. Gold could get also a second wind from an investor flight to safety given the threat posed by the COVID-19 delta variant.

Newcrest remains busy on the exploration and development front. Approval of the next panel cave at Cadia was expected and we continue to think Newcrest is likely to mine there for multiple decades. New project activity remains focused primarily on exploration, development and feasibility studies at Havieron and Red Chris. The recent, and expected, extension to the Telfer open pit will provide an important bridge to production from Havieron, as well as allow Newcrest to continue to explore further potential for life extensions at Telfer itself. We continue to be encouraged by the exploration results at Red Chris with Newcrest focused on growing the higher-grade zone. Like with Cadia’s development, the high-grade zones help to underpin the initial large-scale underground mining effort and infrastructure expenditure, and subsequently open up the broader lower-grade mineralisation for profitable mining.

On the other hand, the tailwind from increased gold and copper prices in fiscal 2021 more than offset a 4% reduction in gold production. EBITDA increased 29% to USD 2.4 billion. Likewise, net operating cash flow after tax was strong, rising 56% to USD 2.3 billion. Newcrest has about USD 240 million net cash and the strong financial position was reflected in a more than doubling of the final dividend to USD 40 cents fully franked. The full year payout of USD 55 cents fully franked more than doubled last year’s USD 25 cent fully franked total.

The increasing shareholder returns are an appropriate use of funds given the windfall cash flows from higher gold and copper prices. We expect net operating cash flows to likely more than cover Newcrest’s likely capital expenditure requirements for the next few years. However, we expect future dividends to decline from the fiscal 2021 payout to average nearly USD 40 cents a share to fiscal 2026. The forecast reflects our expectation for earnings to fall with forecast declines in gold and copper prices from 2021’s elevated levels. We expect dividends to remain a secondary consideration for Newcrest, with the primary focus on value creation through efficient operation of the mines, exploration and developments.

Company profile

Newcrest is an Australia-based gold and, to a lesser extent, copper miner. Operations are predominantly in Australia and Papua New Guinea, with a smaller mine in Canada. Cash costs are below the industry average, underpinned by improvements at Lihir and Cadia. Newcrest is one of the larger global gold producers but accounts for less than 3% of total supply. Gold mining is relatively fragmented.

(Source: Morningstar)

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Outstripped coal prices yields a promising Fiscal 2022 for New Hope

The near-term outlook for New Hope is bright, with the global economic recovery and tight supply conditions providing support to the spot price for seaborne thermal coal (ex-Newcastle). The full-year fiscal 2022 EBITDA was expected to be AUD 676 million despite the ramp-down of production at the New Acland mine. With approval of Stage 3 of the New Acland mine yet to be secured, minimal contribution to coal sales is expected from New Acland in fiscal 2022 as Stage 2 production ramps down. Necessary Stage 3 approvals from the Queensland Government remain delayed by a legal challenge mounted by the Oakey Coal Action Alliance (OCAA) who oppose the ongoing mining at the site.

Financial Strength:

The last traded price of New Hope was 1.92 AUD. The PE ratio of New Hope during 2020 was 13.1, which makes it an undervalued stock. Moreover, it is trading 28% lower than its expected fair value (2.70 AUD). During 2020, EV/ EBITDA of 4.9 shows that the company is in good financial health. 

With realised coal prices exceeding the market expectations in New Hope’s final quarter of fiscal 2021, New Hope’s full-year fiscal 2021 result announcement eclipsed the analyst’s forecast by 6%. The late fiscal 2021 rally in thermal coal price witnessed the full-year fiscal 2021 EBITDA of New Hope rise 26% year on year to AUD 372 million.

Company Profile:

New Hope Corporation is an Australian pure-play thermal coal miner. Its two operating assets–the 100%-owned New Acland coal mine and its 80% interest in the Bengalla coal mine–produce a cumulative 12 million metric tons of salable thermal coal annually. The vast majority of New Hope’s production is sold into seaborne thermal coal export markets. Reserves at New Acland and Bengalla are sufficient to support multi-decade mine lives. New Hope’s undeveloped coal resources are extensive and include exploration status coal resources in excess of 1 billion metric tons in Queensland’s Surat basin.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.