Appreciate the counter view, especially being constructive. Its hard to do sometimes when some zealots will jump down the throat of any opposing view. I welcome more posts like this to challenge the sometimes echo chamber. So thanks.
I'm a relatively new holder only buying the last week or so at 5.60, and I've posted here previously the value I see. I know everything is all doom and gloom ATM, but a few points..
- You are right in that WHC is in a much better position than when it last traded sub $1, id argue its a completely different company to the point of being non comparable. It has about half its tonnage and almost two thirds of its revenue from met coal, an met coal is one of the few things that didn't get sold off last week, one data point doesn't make a trend but its a start.
- The balance sheet is very solid, particular with selling off 30% of Blackwater. That completely covers the remaining 2 payments to BHP due in a couple of years.
- It happens every time there are trade issues, but AUD being smashed is a massive boon for WHC, particularly as this isn't offset by a matching fall in coal prices (yet?)
- Margins are exceptional at these levels, that are 3 years out from the last peak in Coal prices.
- Tit for tat tariffs may actually be a positive for WHC as Australian coal becomes relatively cheaper. US producers are struggling and they run far tighter margins, with a worse product (most of the time)
- This isn't so much a global trade war as it is a trade war against the US. Thermal coal may fall as less power due to less widgets to export to the us are required. But met coal? Most of that customer base is in developing countries that want a better living standard and infrastructure that need steel. I don't see the US tariffs being necessarily a headwind for Australian met coal. It is somewhat connected if those developing countries cant export as much product to the US they wont have as much income for development at home. I'd argue this will be the exact time their governments will roll out stimulus and infrastructure at home to counter this.
Time will tell, and there is a lot of pessimism priced into coal at present, and you're right things may get worse before it gets better, but those long trends arent reversing overnight, and WHC is very well placed to survive on the cost curve.
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