Financial News, Analysis and Data, FNArena

FNArena

Financial News, Analysis and Data

Online financial media company focused on Australian equities, with a global perspective

Equity Bottom-Up

<ul><li>FNArena's Treasure Chest reports on money making ideas from stockbrokers and other experts.</li><li>Today's idea is 'Whitehaven Coal'.</li></ul>

FNArena's Treasure Chest reports on money making ideas from stockbrokers and other experts.Today's idea is 'Whitehaven Coal'.

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

<ul>
<li>We listened to the <a href="https://whitehavencoal.com.au/wp-content/uploads/2023/10/Whitehaven-Investor_update.mp4" target="_blank" rel="noopener">conference call </a>held by <a href="https://www.smartkarma.com/entities/whitehaven-coal-ltd" target="_blank" data-smartkarma-citation="entities:14253:1" rel="noopener">Whitehaven Coal (WHC AU)</a> to update investors on its acquisition of BHP's coking coal mines and  Q2 2024 production. </li>
<li>Based on spot prices of coking coal over 350 USD/ton and cash costs of 20% lower than the average of 2 years, the EV-EBITDA of acquisition is 1.8x</li>
<li>The acquisition could be massively accretive if coking coal prices remain stronger for longer as the company pivots its strategy to becoming a large met coal producer. </li>
</ul>


We listened to the conference call held by Whitehaven Coal (WHC AU) to update investors on its acquisition of BHP's coking coal mines and  Q2 2024 production. 
Based on spot prices of coking coal over 350 USD/ton and cash costs of 20% lower than the average of 2 years, the EV-EBITDA of acquisition is 1.8x
The acquisition could be massively accretive if coking coal prices remain stronger for longer as the company pivots its strategy to becoming a large met coal producer. 


Whitehaven Coal: Great Acquisition, Cash Gone, Now At The Mercy of The Cycle

<ul>
<li>The pivot in capital allocation plans of <a href="https://www.smartkarma.com/entities/whitehaven-coal-ltd" target="_blank" data-smartkarma-citation="entities:14253:1" rel="noopener">Whitehaven Coal (WHC AU)</a> by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us. </li>
<li>We think the increase in capex spending in a frothy pricing environment and focus on M&amp;A for spending the 2.6 bn of cash is a coin toss on capital allocation. </li>
<li>We prefer names that keep their capital allocation plans consistent, e.g., <a href="https://www.smartkarma.com/entities/indo-tambangraya-megah-tbk-p" target="_blank" data-smartkarma-citation="entities:15891:1" rel="noopener">Indo Tambangraya Megah (ITMG IJ)</a>, and would take money off the table here.</li>
</ul>


The pivot in capital allocation plans of Whitehaven Coal (WHC AU) by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us. 
We think the increase in capex spending in a frothy pricing environment and focus on M&amp;A for spending the 2.6 bn of cash is a coin toss on capital allocation. 
We prefer names that keep their capital allocation plans consistent, e.g., Indo Tambangraya Megah (ITMG IJ), and would take money off the table here.


Whitehaven Coal Suspension of Buyback: A Negative Despite Rising Coal Price/ Potential Acquisition

<ul>
<li>
<a href="https://www.smartkarma.com/entities/whitehaven-coal-ltd" target="_blank" data-smartkarma-citation="entities:14253:1" rel="noopener">Whitehaven Coal (WHC AU)</a> released its June Quarterly. The company is in blackout (starting July 1st) till its release of annual results on August 24th, 2023.</li>
<li>June quarter OCF was 435 mn AUD ( Avg Coal Px 177 USD/ton), and net cash on the balance sheet was 2.65 bn AUD representing 45% of market capitalization.</li>
<li>To complete its buyback program, 147 million shares remain left to repurchase (current o/s shares 836 mn). 196 million shares have been repurchased so far since March 2022.</li>
</ul>



Whitehaven Coal (WHC AU) released its June Quarterly. The company is in blackout (starting July 1st) till its release of annual results on August 24th, 2023.
June quarter OCF was 435 mn AUD ( Avg Coal Px 177 USD/ton), and net cash on the balance sheet was 2.65 bn AUD representing 45% of market capitalization.
To complete its buyback program, 147 million shares remain left to repurchase (current o/s shares 836 mn). 196 million shares have been repurchased so far since March 2022.


Whitehaven Coal June Quarterly: 45% of Mkt Cap in Cash, >20% OCF Yield, Aggressive Buyback

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Cross Asset Strategy

<ul>
<li>We first review at Q1 performance in the major markets we follow</li>
<li>The worst may be over in but news flow will drive markets in the short-term</li>
<li>We look at foreign positioning and fund flow data to assess risks</li>
</ul>


We first review at Q1 performance in the major markets we follow
The worst may be over in but news flow will drive markets in the short-term
We look at foreign positioning and fund flow data to assess risks


Australia

Whitehaven Coal Limited mines and sells metallurgical and thermal coals to the global steel, power generation, and metallurgical industries.

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Whitehaven Coal (WHC AU)

Treasure Chest: Whitehaven Coal

FNArena's Treasure Chest reports on money making ideas from stockbrokers and other experts. Today's idea is 'Whitehaven Coal'.

FNArena

Whitehaven Coal: Great Acquisition, Cash Gone, Now At The Mercy of The Cycle

We provide our take on the recent acquisition of the coal assets of BHP by Whitehaven Coal. By consuming all its cash and taking on debt, the...

Sameer Taneja

Whitehaven Coal Suspension of Buyback: A Negative Despite Rising Coal Price/ Potential Acquisition

We provide a rationale for why we do not like Whitehaven Coal's suspension of its buy back program despite the strong coal price environment and...

Sameer Taneja

Whitehaven Coal June Quarterly: 45% of Mkt Cap in Cash, >20% OCF Yield, Aggressive Buyback

Whitehaven Coal has net cash of 2.65 bn AUD representing 45% of market capitalization on its balance sheet and >20% OCF. Despite subdued coal...

Sameer Taneja

Q2 Outlook - Asian Equity Markets

Our outlook for Q2 2026 onwards. Separating the short-term noise from our longer-term investment themes. In Part 2 look at Asian equities

Rikki Malik

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