NHC (ASX) Fire and water

Originally posted by joewolf: ↑

I must say I had you pegged for an older and more experienced investor - that's a credit to you for being a balanced investor. Next time you are at one of these anti-coal discussions you can make yourself very unpopular by pointing out that 19% of our exports are coal and that they generate $47 billion and that we consume 114 million tons ourselves and that replacement of that would pretty well bankrupt the nation. It will destroy any balancing of the budget and in fact put at risk many of the social welfare programs.

I am a renewable fan - I export double my electricity usage (total usage including own consumption) I harvest my own water and supply it as cleaned as well even though I live only 25km from a capital city centre. Really the only thing I get at home is a rubbish collection.

When the discussion starts on the fires, remind the audience to look up who closed the fire tracks because we want pristine forests and who stopped the logging ( at the end it was very responsible) in the forests which only sought to thin overgrown areas. Who stopped cooler weather burn-offs and that despite the fact that the aboriginal community seems to have used them for centuries. Who decided to ignore all the advice of the veteran firefighters, the scientists and the agricultural community and you end up with a group of politicians who should be prosecuted for plain stupidity. It's amazing that all the collective science and experience gets ignored when there is a great story to manipulate the population. Whether it is true or the best outcome is irrelevant.

I am all for a transition to a low carbon footprint but I don't see any logic in the current behaviour. You progress you don't demolish the present and exist in the future. It should be spelt out what the abandonment of coal would do to Australia - it would reduce the value of the A$ dramatically it would take out around 200000 jobs - yes the fact checks say only 37800 people are statistically employed in the coal industry but that doesn't take into account all the ancillary jobs which are not industry related that service the mining company and the community. The multiplier isn't wrong -ask any community that lost the mine nearby.

So why that background - Its part of my thesis of becoming wary of some of my investments. Especially here - I was unhappy when SOL sold some 10% of NHC and thought it was a very cheap price - now that looks like an inspired move. Why invest here - I have moved a lot of my portfolio to international about 30% and then I looked at Australian companies that export their products and earn a large portion of their revenue externally. That's where NHC fits in - as long as it's allowed to ply its trade ( that may be its biggest risk) it will generate cash and be able to pay dividends - in fact, I think they may well have to pay out more as we move away from coal. It reminds me of the tobacco industry whose demise has been predicted for probably half a century now. BAT share price has increased 10 fold since 1995 alone.

I don't expect that Akland will ever get approved and in fact, I predict that coal mining will only get approved in very rural settings where no a greeny activist is prepared to picket. Thus I think the acquisition of more coal deposits to be unwise at present and I think initially you will have to seek non-banking finance to get these mines operational. That may well be a role that NHC can perform and I expect that many opportunities could be brought to NHC via the financing route. I was interested to note that another poster suggested that you get both coking and thermal coal via an investment in SOL. I cannot see that there are any operational coking coal mines in the NHC portfolio - that does worry me and to get the balance I want I have invested in SMR as a counterbalance to the cyclical pricing. What I cannot extract in my thesis is a view on future coal pricing - do you have to become a cheaper alternative as the lobby groups get more vocal. Is the price going to go up as no new resources are funded? My view has been that I cannot predict so I have them staying the same in my thesis.

Expand

Agree entirely.

I used to use smr for coking coal exposure (sold into the takeover offer) but think adaro which owns kestrel is a safer pick without the political risk. crn would also be safer than smr I think.

smr is pretty high cost/leveraged.

also agree about non bank financing. Nhc has excellent cash flows and could use partner financing with Taiwan possibly. Nhc are renowned in the industry for being excellent operators so I wouldn’t be surprised to see them take over other mines at the right price.

chance of new acland has probably dropped to <50% but market is pricing it at zero.

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Price($)	Vol.	No.
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(20min delay)
Last $4.93		Change 0.120(2.49%)		Mkt cap ! $4.167B

Open	High	Low	Value	Volume
$4.88	$4.96	$4.84	$9.046M	1.841M

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