Morningstar | Near-term Dividends Likely Strong but Coal Prices and Capital Allocation Key to Future Returns
Whitehaven aggressively expanded production through the commodities boom, particularly with the flagship Maules Creek mine starting in 2015. The strong recovery in coal prices in 2016 to 2018 helped to generate much-needed cash flow to meaningfully repay debt. Maules Creek adds lower-grade metallurgical coal to Whitehaven's product mix, with the company aiming to increase it to more than 45% of the total output, from around 20% in fiscal 2019. Narrabri is Whitehaven's other major mine and is a low-cost, high-capacity underground thermal coal mine. The company aims to increase output, but we think the key driver of performance will be coal prices. Here we think China is a relatively high-cost producer and the large supply of high-cost coal from China should be support of coal prices.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).
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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