Goldman update 6/10/2021 extract from full report on comsec
NHC (Neutral, A$2.7/sh TP, 19% TSR)We revise our 2022/2023 EPS by 8%/5% on higher coal prices for the quarter. Our NAV is up 3% to A$2.4/sh and our 12-month TP is up 4% to A$2.7/sh (from A$2.6/sh).We remain Neutral on: 1. Valuation: The stock is trading at c. 1.0xNAV (A$2.4/sh) at our long-run thermal of US$70/t (real), with 11% upside to our TP, lower on a relative basis than our Buy-rated coverage (and coal sector peers). 2. Attractive FCF yield and capital returns outlook: NHC’s Bengalla mine in NSW is one of the lowest cost thermal coal operations in Australia. NHC is trading on a FY22/23 FCF yield of 38%/13% in our base case. NHC will have net cash (+ leases) by the end of FY22 (July) on our estimates. We forecast a dividend yield of 13%/7% for FY22-23. 3. Acquisition/M&A risk: NHC stated at their recent FY21 results that they continue to look for M&A opportunities focusing on long life high quality thermal coal resources that is value accretive from day 1.
NHC Price at posting:
$2.59 Sentiment: Buy Disclosure: Held
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