WHC

1.01%

$6.86 whitehaven coal limited

Obviously missing the cash debt positions. As you've noted. ....

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hagetaka

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22/07/24

14:13

Post #: 74857991
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Originally posted by Cashmeoutside: ↑

This is a big claim to make. And what is 60% overvalued - the equity or the EV? Cos it is the equity you’re buying…

YAL the past quarter realised a price of A$181/t and we know their costs are around A$96/t.. so call EBITDA margins A$85/t, allow some deductions for capex, corporate and tax and perhaps A$50/t FCF on 35mtpa equity sales is A$1.75bn or A$1.33/sh.

WHC thermal Ops realised A$207/t - which is +A$26/t on YAL but we know costs are around A$16/t more expensive here (at the moment but let’s assume it stays that way). So A$95/t margins, make the same allowances for capex, corp, taxes and A$60/t FCF on 13mtpa equity sales is $800m or A$1/sh.

WHC Met Ops is a bit unknown - we know they’re realising almost A$70/t higher prices than thermal (A$271/t) but costs are likely in the order of A$40-A$50/t more expensive. So add net $25/t margins to the thermal margins and you’re at A$110/t margins, perhaps A$75/t FCF on 15mtpa equity sales (A$1.40/sh).

So here you have WHC making A$2.40/sh on the above math and YAL A$1.33/sh.. almost double the earnings (cash flow) per share but YAL is trading at ~$7/sh and WHC ~$8/sh.

What I’ve obviously missed here is the cash/debt positions along with deferred and contingent payments over the short term. But that all gets resolved out of near term earnings.

My point being here that WHC has nearly double the EPS in a couple years time to YAL (on my figures above, happy to hear why they’re wrong) and it’s EPS as SHAREHOLDERS that should matter. Yes there is a deleveraging process that needs to occur here before the earnings per share make their way into shareholders pockets (via dividends per share) but that’s just a timing thing.

What would you rather - A$1.33/sh out for foreseeable future or zero for the next 2years and then A$2.40/sh for the foreseeable future (plus first on costs you A$7 and second A$8).

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Obviously missing the cash debt positions. As you've noted.
.
Yes, there's a higher FCF with whc... which is going to pay down debt, but, the lower realised prices and greater costs will push that payback time out, delaying the return. Therefore I'm getting closer to 5x multiple and 3x multiple, which gives me that 60/40 response above. 25c divvy from Yancoal vs 6c divvy from WHC NSW operations...
.
Yancoal just looks better at the moment...

WHC Price at posting: $8.04 Sentiment: Hold Disclosure: Held
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(20min delay)
Last $6.86		Change -0.070(1.01%)		Mkt cap ! $5.739B

Open	High	Low	Value	Volume
$7.00	$7.02	$6.80	$39.73M	5.777M

Buyers (Bids)

No.	Vol.	Price($)
1	100	$6.86

Sellers (Offers)

Price($)	Vol.	No.
$6.88	8721	3

View Market Depth

No.	Vol.	Price($)
1	100	6.860
1	25	6.830
2	10117	6.800
2	3208	6.790
1	1474	6.780

Price($)	Vol.	No.
6.890	5000	1
6.920	4800	1
6.960	5000	1
6.990	1000	1
7.000	46778	7

Last trade - 16.10pm 08/11/2024 (20 minute delay)

WHC (ASX) Chart

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