@sjontour - no idea why the quoting disappeared.
Two very big reasons why P/E is a bad metric (atm) to use when comparing NHC vs another.
Firstly. Production costs. NHC produces coal cheaper. So when coming out of a low coal price/revenue environment NHC is going to seem like its underperforming on this metric. As they WERE making much more in comparison. That is no longer the case. (remember the pricing lag too - delayed that price surge flowing into their bottom line)
NHC FOB cash cost is AU $63/t. WHC is I think around AU $73/t. (production costs, so before royalties, tax etc)
Around the longer term average of US$70. (AU $94) WHC is making 20t, while NHC is making 30t. That is a HUGE difference in earning potential.
So even though NHC mined less coal than WHC, they earned quite similar in low coal price environments.
- NHC 14 million tonnes a year mined while making $30t = 420 million a year.
- WHC 20 million tonnes a year mined while making $20t = 400 million a year.
Huge difference. Plus I think WHC have higher additional royalties over Narrabri mine etc which NHC's bengalla doesnt have. So WHC costs are much higher.
However, when prices are like now. (lets say the average for the last 4-6 months is around US$150t. Thats around 203 AUD.
- NHC 14 million tonnes a year mined while making $140t = 1.96B a year.
- WHC 20 million tonnes a year mined while making $130t = 2.6B a year.
NHC is better in low price environments. WHC is better in high price environments.
Secondly - lost production. NHC is going to be losing a lot of production on their next report. This is because Acland is moth-balled thats 2mt gone (from their last report) and 5-6mt from earlier years. Either temporarily or for good, depending on the courts. That production counted in their last P/E, but wont count for their next P/E. Hence once again when you are using that metric that is temporarily wrong and looks better for NHC than reality.
So it looks more like this.
- NHC 10 million tonnes a year mined while making $140t = 1.4B a year.
- WHC 20 million tonnes a year mined while making $130t = 2.6B a year.
FYI, my numbers are rough. And very roundish just to help my points. ie, NHC - Bengalla mines 10 million but only owns 80% for example. So that 1.4B isn't actually completely ours. Same with WHC.
Looking at the current prices (both SP and coal price), and ONLY considering the next 6 months, I think WHC is still more undervalued than NHC. When you assuming a longer term, where coal prices will likely return more to the norm. Well then it becomes more of a guessing game.
I like both. I own both. In my personal account these are the only two companies I have. I do like WHC more atm.
Final note; This could all change depending on what NHC plan to do with the money they raised. What are they buying? When does that production start counting for NHC revenue? (obviously the earlier the better, so it can take advantage of the high prices).
Hope this helps.
(20min delay)