Whitehaven Coal Limited

In-Line performance: Whitehaven Coal Limited (ASX: WHC) reported in-line full-year performance in which Total Coal Sales grew by 7% to 22.1 Mt from the previous year. In the same order, the company recorded full-year ROM coal production of 22.9Mt and full-year saleable coal production of 20.9Mt which are largely in line with the previous year and within the guidance range. During the period, the company has completed the acquisition of the remaining 25% interest in the Winchester South Project. Furthermore, safety performance across the sites remains strong with both Rocglen and the Gunnedah CHPP achieving over 2,000 days in terms of injury-free days. However, Whitehaven’s TRIFR recorded 6.91 injuries per million hours worked at the end of June, a small deterioration from the end of March rate of 5.51. With shift in demand for coal in view of cleaner technology, the outlook is a bit mixed with some support from steel production.


Managed Production and Sales Highlights (Source: Company Reports)

On the financial front, ROE increased from 5.3 per cent in 1HFY17 to 7.7 per cent in 1HFY18 and there was a reduction of debt in the capital structure from 0.24x to 0.07x in 1HFY18 against prior corresponding period. Besides this, Prudential Plc and its subsidiary companies ceased to be the substantial holder of the Group since 22 June 2018. Meanwhile, WHC stock has risen 28.04% in three months as on July 16, 2018, and trading towards 52-week high level ($ 5.950). Hence, we maintain our “Expensive” recommendation on the stock at the current price of $5.400, considering commodity price volatility.

 
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