Strong Whitehaven First Half Boosted by Likely Transitory High Coal Prices
We maintain our AUD 1.00 per share fair value estimate for Whitehaven Coal. The shares remain overvalued with the rapid rise in coal prices likely to unwind as China loosens restrictions on mining and economic stimulus from 2016 wanes. The spot coking coal price has fallen to around USD 160 per tonne from above USD 300 per tonne in late 2016. Excessive market optimism and likely coal price falls are the key catalysts for the share price to retrace. We maintain our no-moat rating. Assets are long...Whitehaven Coal is principally engaged in the development and operation of coal mines in New South Wales. Co. has two reportable segments: Open Cut Operations and Underground Operations. Mining operations include Maules Creek open cut mine (75% Co. ownership and operator); Narrabri underground mine (70% Co. ownership and operator); and three smaller open cuts mines, Tarrawonga (70% Co. ownership and operator), Rocglen (100% Co. ownership) and Werris Creek (100% Co. ownership).
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