Whitehaven Coal Limited (ASX: WHC)

Positive March 2018 quarter update:Whitehaven Coal Limited announced that it has received Ministerial Consent and approval for the transfer of Idemitsu’s 30% joint venture interest in the Tarrawonga mine to the company. The acquisition increases Whitehaven’s equity share in annual saleable coal production by about 0.55Mtpa. The completion of the acquisition further consolidated Whitehaven’s position in the Gunnedah Basin, the source of some of the highest quality coal available in the seaborne market. Safety performance across the group continued to improve, with Whitehaven’s TRIFR of 5.51 recordable injuries per million hours worked at the end of March, declining from 6.19 at the end of December. The improvement continues the trend that began in early FY2014 when Whitehaven’s “Safehaven Rules” were introduced.


Production and Sales Performance for March 2018 Quarter (Source: Company Reports)

Environmental Impact Statement (EIS) has been revised to include updated noise and dust modelling brought about when Whitehaven advised in December 2017 that it would remove the Bluevale Pit from the Vickery 10Mtpa project. Whitehaven paid a $129 million interim dividend (13 cents per share) to shareholders in March, representing about 50% of the NPAT for the first half of FY2018. Whitehaven has also agreed to purchase Rio Tinto’s 75% interest in the Winchester South metallurgical coal project. The demand for metallurgical coals in the quarter has been stronger than expected as steel producers maximize production to capture the benefit of strength in steel prices. The share price was up by 106.8 per cent in the last one year and was up by 16.59 per cent in last one month. The stock price was up by 6.8 per cent as on 16 May 2018. The stock is trading at higher levels and is inching towards its 52-week highest price of $5.36, so the stock looks “Expensive” at the current market price of $5.33.
 

BlueScope Steel Limited (ASX: BSL)

Upgraded the Guidance: BlueScope expects that its underlying earnings before interest and tax (EBIT) for the six months ending 30 June 2018 will be around $680 million, compared to prior guidance of $606 million provided in February. Following continued strong steel spreads in North America, the increase was mainly due to stronger performance at its North Star mini-mill in Ohio on higher realised steel spreads. Other factors that contributed were Australian Steel Products performance that was moderately better than prior expectations, including higher margins on export coke sales. Another one was building products in ASEAN, North America & India. Lower contributions from ASEAN businesses were marked due to lower volumes and margins with continued softness in the projects segment.


Region-wise Underlying EBITDA performance for 1HFY18 (Source: Company Reports)

This was being partly offset by stronger than expected margins in North America. Group’s other businesses were performing well, and generally in-line with its expectations that were set out in February. BlueScope’s financial results for the six months ending 30 June 2018 will be released on 13 August 2018, at which time the Company will provide earnings guidance for 1H FY2019. The Vanguard Group, Inc became the substantial holder of the BlueScope Steel Limited since 10 May 2018 by holding 27,559,047 securities and 5.002 per cent of the voting power of the group. In the past six months, the stock price climbed up by 35.73 per cent and by 12.96 per cent in last one month. The stock is trading at higher levels and looks ‘Expensive” at the current market price of $17.82.

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