By my calculations, using the coal price futures for the next 12 months, which imply the coal price reducing from the current us$170/tn to circa us$120/tn, new hope will generate >$1 billion ebitda in fy2022.
They won’t pay much tax (profit in fy2021 was relatively low), and capex won’t be much, as they did a major overhaul last year. Therefore after tax cash generation should be close to ebitda.
a $4 share price implies a market cap of $3.2 billion. With debt basically $0 now, and $1 billion cashflow over the next 12 months, enterprise value will be $2.2 billion this time next year based on the $3.2 bn market cap. This is only about 5x ebitda at us$80/tonne, or 3x ebitda at $100/tonne.
this is a very realistic (some might say, cheap) valuation. So provided there is no significant coal price crash within the next few months, $4/ share within a year is very realistic in my opinion.
of course, you can adjust the above for dividends, but either way it is value to shareholders in dividends or capital growth.
NHC Price at posting:
$2.21 Sentiment: Buy Disclosure: Held
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