1.Livewire Markets 19.12.23 K. Sun cites Morningstar Analysts.
Morningstar are bullish on the continuing strong profits of thermal & metcoal miners in the near to medium term; &, in particular, they select WHC as one of their top 4 mining picks of 2024- their WHC Target Price is $10 in the next 12 months.
K.Sun said
"Morningstar's commodity outlook and top stock picks
Morningstar says these four miners are trading at the greatest discount to its fair value estimates...
Top Picks and Fair Value..
Whitehaven Coal (ASX: WHC)
- Commodity: Metallurgical and thermal coal
- Year-to-date performance: -23%
- Last close: $7.22
- Fair value estimate: $10.00
- Rationale: "We think its deal to buy two metallurgical coal mines from BHP is a good one, diversifying its production to roughly half thermal coal, half metallurgical coal ... Both high-quality thermal coal and metallurgical coal are likely to be supply restrained due to ESG concerns and regulatory opposition, which could support prices longer-term."
2. The SP of WHC, a large capitalisation stock, is obviously controlled by large investors, NOT retail investors.
Large investors fully understand, of course, that:-
. WHC dividends (which can only be paid from thermal profits until 30.6. 27) will be reduced (cf to the last 2 years) until Daunia & B'water met mines are fully paid off by 30.6.2027- then dividends will rise
greatly , due to the acquisition of these 2 very profitable mines.
. the big increase in WHC profits (as numerous expert analysts & Brokers have already published) will occur from as early as 1.4.24; or as late as 30.6.24, final takeover date.
. WHC profits will again rise strongly, if &when (2027?) Winchester South met coal mine (The State Qld. CoOrdinator general on 24.11.23 approved the mine)) will probably go into production; & that WHC has specifically stated that Winchester South has efficiency synergies with its Bowen Basin BHP purchase.
The fact that WHC has had good SP growth recently when, conversely, thermal coal prices have concurrently retreated c. 15% in the last few weeks is obviously counterintuitive, & seemingly "inexplicable". The explanation is a Revaluation- & the big knowledgable investors are very keen to increase their holdings in WHC, a veritable cash cow.
IMO, WHC is currently undergoing a "quiet Revaluation" by big investors- & they will gladly acquire more shares from any retail investors who
might fret over a short term reduced dividend.
(20min delay)