In this HY we have bought back 11M shares at an average price of...

In this HY we have bought back 11M shares at an average price of $7.50, so about $85M spent in total so far. I would expect at least another 33M bought back in the remainder of the half given we only began BB near the last week of Feb. SP is clearly in freefall, much like everything else, so our average buy may be around $5 or $6 per share for the half. If we get those 43M shares for around $300M it will take up most of the 20-50% pay-out ratio.

If coal prices remain at US$150-200 for the rest of the half it would make our average sale price for the period around US$220. With the standard formula, I got exactly $1 of after-tax EPS on 850M SOI. The $300M spent on buyback would make up 35 cents of total EPS, or 35% pay-out ratio. Leaving only 15 cents for the dividend. They may choose to go above 50% pay-out and announce a special dividend. Any objections to my logic, please let me know.

Although I am disheartened, I still see possibility of reaching our target price in the medium term. Below conservative estimate of full year average coal sales price of US$150 gives us an indication of where we would stand.

NEWC: US$150
ROE (0.68): A$220
Discount to NEWC: 0%
Less 8% Royalty: $202
Less unit Cost: $98
EBITDA Margin: $105
Times Volume: 14.5Mt (mid-point of guidance)
EBITDA: A$1.52B
Les Finance: $30M
Less D&A: $270M
PBT: $1.22B
Less 30% Tax: 366M
NPAT: $854M
SOI: 700M (assuming buyback is completed, likely end of 2024)
EPS: $1.22

Original target PE of 11 on the above would give us a SP of $13.42. A more favourable coal price would make $18.72 attainable as per the opening post. However, this would be subject to a calmer global economy. Commodity prices are more reflective than determining factors of global economic health. Everything is getting sold off, but I am still holding! There could be better opportunities, however a contracting global economy and interest rate hikes will have a negative material impact on most companies.