Stocks’ Details

Coronado Global Resources Inc

Positive Operational Performance: Coronado Global Resource Inc (ASX: CRN) is engaged in the development and operation of premium quality metallurgical coal mines.

Highlights of March Quarter: During the period, the company reported ROM production of 7.8 Mt, up 5.4% on pcp and 4% on the previous quarter. Saleable production during the quarter totalled to 5.0 Mt, up 2.0% on the previous quarter. Coal sales during the quarter were in line with the previous quarter at 5.0 Mt, up 6.4% on prior corresponding period. 75.4% of the total sales were through exports, up 8.6% on pcp. New source of production at the Logan mine resulted in a 19.3% increase to saleable production as compared to the previous quarter.


Production and Sales Summary (Source: Company Reports)

Outlook: The company updated its guidance for FY19 as compared to the IPO Prospectus forecast. Production for FY19 is expected to be in the range of 21.6 Mt to 22.0 Mt. EBITDA for the period is expected to be between $737 million to $807 million.


Updated Guidance (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 18.73% and 34.73% over a period of 3 months and 6 months, respectively. YTD returns from the stock stand at 29.87%. During the March quarter, the company reported a positive operational performance in terms of production and sales increase, both with respect to pcp and the previous quarter. The group is progressing well with several key operational initiatives in FY19 that underpin its market guidance. The initiatives have started to witness a positive impact on operations in Australia and the US. However, with the sharp increase in share price, we presume that most of the positive factors are factored in at the current level and we look forward to further catalysts which might uplift the stock price from hereon. Hence, we give an “Expensive” rating on the stock at a current market price of $3.450, down 2.817% on 09 July 2019.
 

Independence Group NL

Production from Nova Exceeds the Guidance: Independence Group NL (ASX: IGO) is engaged in mining and processing of nickel, copper, cobalt, gold, zinc and silver. Recently, Legend Mining Limited has signed a Subscription Agreement with IGO to raise $9.8 million at an issue price of 3.6 cents per share. In addition, the company has signed two new joint venture agreements with IGO and Creasy. As per one of the agreements, Rockford JVA 2019, IGO will have 60% interest along with management rights and responsibilities. The other agreement named Legend/IGO JVA 2019 gives IGO the 70% interest, management rights and responsibilities.

In another announcement on ASX, the company updated that full year metal production for FY19 from Nova exceeded the guidance and Tropicana production was within the guidance range. Production of Nickel from the Nova operation stood at 30,708 metric tonnes for FY19. Production of copper stood at 13,693 metric tonnes and cobalt at 1,090 metric tonnes.


Production Summary (Source: Company Reports)

Financial Highlights: During the March quarter, underlying EBITDA amounted to A$117 million and unaudited profit after tax amounted to A$45 million. The company reported strong underlying quarterly free cash flow of A$89 million, reporting net cash of A$172 million at quarter end.

Outlook: The impressive operational performance from Nova and Tropicana is underpinning the company’s growth strategy focused on exploration and discovery.

Stock Recommendation: The stock of the company is currently trading close to a 52-week high level of $5.170. YTD returns on the stock stand at 35.81%.As per the latest production report, the company reported Nova production higher than the guidance provided which is evidence of the quality of its assets. Underlying EBITDA in the March quarter also improved due to an improvement seen in Nova EBITDA. During the period, the company reported strong cash from operating activities at both Nova and Tropicana.

In 1HFY19, the company had an EBITDA margin of 39.1%, which is higher than the industry median of 34.6%. Gross margin for the period was 59.1%, higher than the industry median of 41.6%. Based on the foregoing and looking at the current trading level, we give a “Hold” rating on the stock at a current market price of $4.910, down 0.406% on 09 July 2019.
 

Washington H Soul Pattinson & Company Limited

Period of Highest Ever First Half Regular Profit: Washington H Soul Pattinson & Company Limited (ASX: SOL) is engaged in coal mining, gold and copper mining & refining, property investment and consulting. In a recent announcement, the company updated that it has reduced its voting power in Novonix Limited from 13.89% to 12.51%.

Financial Highlights: During the first half of FY19, the company reported group regular profit after tax amounting to $186.7 million, up 12.2% on the prior corresponding period. Group statutory profit after tax was reported at $179.2 million, up 22.6% on pcp.SOL’s pre-tax net asset value stood at $6.0 billion, up 10.2% on pcp. The company declared an interim dividend of 24 cents per share, up 4.3% on the prior corresponding period.


1HFY19 Financial Performance (Source: Company Reports)

Outlook: The company’s portfolio is well positioned to deliver continued growth. The Management expects the performance of thermal coal, telecommunications subscriptions and property to progress, even if general market conditions soften. Also, New Hope Corporation Limited, one of the group entities, is capable to deliver profitable mining operations through its high-quality assets. The company has also secured a five-year debt financing which will help to underpin its growth initiatives over the medium term.

Stock Recommendation: The stock of the company generated returns of 1.65% and -9.58% over a period of 1 month and 3 months, respectively, which reflects that the stock is quite volatile. While the company’s portfolio is well positioned to deliver continued growth, there are some early signs emerging with respect to consumer sentiment and economic activity. Currently, the stock is trading close to a 52-week low level of $20.420 with PE multiple of 18.15x. Hence, in the view of aforesaid facts and looking at current trading level, we have a wait and watch view on the stock at the current market price of $22.500 (down 1.055% on 09 July 2019), and suggest to investors that they should wait for few more catalysts that can mitigate the prevailing volatility.


Comparative Price Chart (Source: Thomson Reuters)      

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