The debt-funded expansion of Maules Creek sees Whitehaven vulnerable if coal prices turn south.
We raise our fair value estimate for Whitehaven from AUD 0.40 to AUD 0.55 per share following the fiscal 2016 result. With the recent improvement in the coal price, the company looks set to avoid a potential for an equity raise and we remove the discount for this scenario. Lower costs and the more favourable coal price should allow debt metrics to recover over the next few years. The valuation also improves with the time value of money.Whitehaven’s underlying net profit after tax of AUD 21 mil...
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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