AUST today. (Extract): WHITEHAVEN EYES BIG RETURN ON COAL CASH...

AUST today. (Extract):
WHITEHAVEN EYES BIG RETURN ON COAL CASH
Nick Evans - Valerina Changarathil
Whitehaven Coal will kick off a share buyback of more than $2bn after shareholders agreed to plans for the company buy as much as a quarter of its own share register back on the market.
Investors voted overwhelmingly in favour of the buyback, in which the company will buy up to 240,000 of its own shares – one of be the biggest on-market buyback programs in local corporate history, as a proportion of its own issued capital, particularly given the company has just closed out a 10 per cent buyback.
With Whitehaven shares closing just below $10 on Wednesday, the approval means the company could splash as much as $2.5bn through the buyback and managing director Paul Flynn telling holders the company could even look to increase its share buyback as coal cash keeps rolling in.
Whitehaven has a policy of returning 20- 50 per cent of net profit to shareholders, and booked a $2bn after-tax result last financial year. With coal prices so far this year well up on last year’s average and still sitting at close to $US390 a tonne, profits are likely to surge from last year’s records.
Over the past year Whitehaven has already returned $588m to investors through an 8c-a-share interim dividend and 10 per cent buyback completed last week.
While Mr Flynn said Whitehaven would look to retain cash to pay for its growth options, he said Whitehaven’s payout ratio could rise above its 50 per cent policy if the cash keeps rolling in. “If buying back additional shares continues to be more attractive than investing in growth then our payout ratio may be higher if there is surplus cash,” he said.
Commonwealth Bank resources analysts this week tipped the thermal coal price to soften over the next nine months, but are still forecasting prices for high-value Australian coal to trade at an average $US325 a tonne in the three months to June 30, 2023.
“Share buybacks have been and are expected to remain an efficient and value-creating way to return capital to our shareholders, particularly if the share price is undervaluing the company, which we believe remains the case,” Mr Flynn told shareholders at Whitehaven’s annual meeting in Sydney on Wednesday.
“While the share price has appreciated considerably over the past year, increasing from around $3 per share a year ago to above $10 in recent weeks, earnings have increased more significantly.”……