Equity Analysis /
Australia

AU : Whitehaven Coal - Upgrade cycle builds further momentum

    Tom Sartor
    Tom Sartor

    Senior Analyst - Resources & Metals

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    CGS-CIMB
    14 January 2021
    Published byCGS-CIMB

    Another solid production quarter reaffirming FY21 production and cost targets builds further comfort in the cashflow and balance sheet outlook. We adjust our forecasts on slightly higher 2H price forecasts and lower assumed capex, lifting our valuation to $2.15 (from $2.00). The strong thermal price recovery should now see the market’s prior balance sheet concerns evaporate, although WHC still trades at a ~15% discount to fair value and remains heavily shorted. WHC still looks compelling here for its discount to NPV and constructive short term outlook for thermal pricing.