CEY - Centennial Coal

[noirua]

noirua i see you have made posts on a couple of coal stocks, which one do you think is the best and do you currently hold any of them if you dont mind me asking, cheers.

Hi mitch87, All the coalminers have Quarterly and Half yearly results out this January and February, and it may be best to wait and see what the Half Yearly Reports bring.

I follow shipping out of all of the ports in NSW and QLD and there is a confusing picture emerging. This could be that clients are running down their stocks of PCI and coking coal, as they are cash strapped or feel there are better deals down the line.
Until this position works itself out the picture is very foggy indeed.

Giving a view of the best stock in the sector is like taking a punt in the dark, and as I keep 70% - 80% of my money in cash and short term bonds/treasuries, my risk could be different to your own.

 

[mitch87]

thanks for that noirua, although at the dangerous end of the risk scale i am playing the coal sector atm. I have been tracking FLX of late but as they have not yet informed the market of a decrease in their coal shipments this may come out in their upcoming quarterly report. im happy to sit out this one and see what happens.cheers

 

[michael_selway]

thanks for that noirua, although at the dangerous end of the risk scale i am playing the coal sector atm. I have been tracking FLX of late but as they have not yet informed the market of a decrease in their coal shipments this may come out in their upcoming quarterly report. im happy to sit out this one and see what happens.cheers

Well CEY has doen well in the last few days

Main reason is Thermal Coal remaining strong while Coking Coal demand falling sharply. So it appears if these companies can switch their production to produce more of the former and less of the latter, then they will do well etc

thx

MS

 

[gfresh]

Whacked -22.27% today after half-year profits announced. Looks like many large holders were none too happy with it as well!

Underlying NPAT: $50.7M
After failed exchange hedging: $42.7M

Basic EPS: 12cps

Interim Dividend: 7cps fully franked

Looks like EPS for the full year may only be in the low 20's if similar results are achieved in the second half. This seems to be way under the lower case forecasts of 40cps.

 

[Boggo]

Another one of many accurate stock behaviour observations in a difficult trading environment, well done Nick.

 

[nulla nulla]

Seems over sold to me, but I could be biased because I hold. As I understand it thay sell a huge proprotion of their coal to the NSW power stations and most of their Domestic and International production is locked into advance orders. Correct me if I am wrong, by all means.

 

[noirua]

Hi mitch87, All the coalminers have Quarterly and Half yearly results out this January and February, and it may be best to wait and see what the Half Yearly Reports bring.

I follow shipping out of all of the ports in NSW and QLD and there is a confusing picture emerging. This could be that clients are running down their stocks of PCI and coking coal, as they are cash strapped or feel there are better deals down the line.
Until this position works itself out the picture is very foggy indeed.

Giving a view of the best stock in the sector is like taking a punt in the dark, and as I keep 70% - 80% of my money in cash and short term bonds/treasuries, my risk could be different to your own.

After today's 22% fall it shows how waiting for the half yearly report was important.

Half Year Results Presentation: http://www.asx.com.au/asxpdf/20090218/pdf/31g3khx22pbkxz.pdf

 

[noirua]

After today's 22% fall it shows how waiting for the half yearly report was important.

Half Year Results Presentation: http://www.asx.com.au/asxpdf/20090218/pdf/31g3khx22pbkxz.pdf

At first glance it looks as if these are excellent results for Centennial Coal with profits up 52% and dividend at 7c against 4c last time. However, this is not the case as confidence has slipped on looking deeper.

A hedging loss of $42.7m is not good news and deeper in the results an $18.7m, not yet taken, loss on coal swaps that will not be completely closed out until the end of calender year 2009.
ROM production is down 8% and sales 12%.
Due to sales of Anvil Hill and Austral Coal the $223.2m received in 2008 boosted EY to 78.3c and is down to 12c this time in 2009.
Assets now sit at $1,197,700,000 against $1,523,300,000 last time.
Centennial will have to rely more on thermal coal sales as PCI and semi-soft sales are very weak, along with prices.

 

[Nero64]

Anyone think this stock can regain its former glory above the $5. I bought this stock more than a year ago and watch it almost double my buying price but I didn't sell. I am new to this game so please forgive me.

Anyway have you noticed how this stock will spike $1 - $2 in a few days. Maybe not now but it was doing it frequently during the year. Who was buying it. Surely people believe in it. I read from Smart Investor Mag ( Hey don't knock it as that mag made me $1500 on Tiaro coal CFDs- TCL) that a lot of the big institutions like it.

Around new year 08/09 it lept $1.30 to $3.50. - Maybe super funds sureing up their balance sheets.

I made the mistake of buying more shares just before its half yearly anouncement as I thought it would be good. They sort of hyped it up before hand - Eg live webcast etc and I was in complete shock when it fell 40-50c the day after. Come on its results weren't that bad.

It's not a dog it should float when the rest of the market goes up in a few years time.

Thoughts?

 

[noirua]

Centennial Coal has quite a lot going on and until they are able to be valued on coal production and proper sales, excluding these misleading ROM figures, they are only for those who are able to research deeply and understand.

Do you believe this increase in dividend to 7c from 4c is likely to be a continued trend and are they properly afforded in the long term?

If you think coal prices are going to bounce in late 2009 then Centennial are probably cheap, imho. What happens if thermal coal prices continue to tank though?

Present thermal coal price at Newcastle, 3 months delivery spot, is US$62.17: Down from the agreed US$125 per tonne in April last and a peak of US$194 a tonne last July. Exchange rate was AU$1.07 to the greeenback in April 08 and at AU$1.566 today, needs to hold at these low rates to help Centennial.

 

[michael_selway]

Centennial Coal has quite a lot going on and until they are able to be valued on coal production and proper sales, excluding these misleading ROM figures, they are only for those who are able to research deeply and understand.

Do you believe this increase in dividend to 7c from 4c is likely to be a continued trend and are they properly afforded in the long term?

If you think coal prices are going to bounce in late 2009 then Centennial are probably cheap, imho. What happens if thermal coal prices continue to tank though?

Present thermal coal price at Newcastle, 3 months delivery spot, is US$62.17: Down from the agreed US$125 per tonne in April last and a peak of US$194 a tonne last July. Exchange rate was AU$1.07 to the greeenback in April 08 and at AU$1.566 today, needs to hold at these low rates to help Centennial.

Hi Noirua, do you hold any CEy shares atm?

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 16.5 24.2 23.2 34.9
DPS 21.0 13.5 13.0 22.0


thx

MS

 

[Nero64]

Up 3.5c today in a down market. I suspect people are accumulating for the 7c interim div. Then once ex cya baby. Predicatable. I suppose the trick is to get out before it falls back below the buying price. How can you if it opens 20c down....hmmmm

 

[noirua]

Hi Noirua, do you hold any CEy shares atm?

thx

MS

Yes m_s, I hold CEY shares bought in 3 small parcels, all the way down in fact. Only coal shares I got out of in time were PRC and COK. Hopeful as ever - noi

 

[Nero64]

Ever feel CEY is getting the wrong end of the stick.

A report in the newspapers on the lowering prices of coking coal

NHC also a thermal coal producer goes up 15c today

CEY goes down 13c.

CEY owns 13 mines. It's Australia's largest independent coal producer. It has a steady stream of income as being a provider for the NSW government.

NPAT was at 50.7 mill.

NHC NPAT was 90.68 mill in Sept last year.

CEY pays a better dividend

Both have similar coal outputs from their mines ( correct me if wrong )

I think CEY will have re-bargain the bulk of it's after 1 April when the new price bargaining occurs.

CEY price won't be helped by the carbon credit introduction either.

Do you ever get the feeling you've bought into the wrong coal company.

Oh yes I wasn't complaining when the price went up to 6.40. Why didn't I sell? because like you all who own this stock, I believed in the continuing mining boom.

 

[Nero64]

Anybody know why this stock has been going up recently? Up today 8.5%.

hope it continues for another day or so atleast.

 

[Nero64]

Again sold of today. Down 8% at the moment. The news that came out is not that bad at all and sort of expected.

Full year earnings for Centennial Coal Company Ltd are likely to be at the lower end of expectations, the mining company says in its latest quarterly report.

Centennial Coal on Thursday reported coal sales of four million tonnes in its March 2009 quarter, up 21 per cent on the same period a year ago.

However, weak export thermal coal prices meant earnings for the current financial year would probably be at the lower end of analysts' recent forecasts, the report said.

"Earnings are now expected to be within the range of $65 to $72 million after tax," the report said.

Thermal coal is used as the feed for coal-fired power stations.

Centennial chief executive Bob Cameron said surplus metallurgical coal being sent into the thermal coal market had a significant effect on export prices.

"Despite the difficult economic climate, Centennial has not experienced any significant demand weakness with some early signs of a tightening thermal market now evident," Mr Cameron said.

The company said year-to-date export sales were up 51 per cent on a like-for-like basis and quarterly sales were up 21 per cent compared to the March 2008 quarter for their share of operations.

Saleable production for Centennial's equity share was also stronger in the March 2009 quarter.

Compared with the same period a year earlier, saleable production in March 2009 was up seven per cent, at 3.86 million tonnes.

In the year to date, saleable production has been about 11.3 million tonnes.

Disappointing to say the least. Should've sold at $6.20

 

[Steven12]

To all those who said they should have sold at 6 dollar range, obviously everyone should have a target range to sell when share a bought, and vice versa, the key is sticking with your targets and not get greedy.


CEY has made a comeback from the low 1.70 and I will call that a bottom and won't be retested. I think it's intrinsic value stands at around 2.50 -3.00 dollars and any anything over 3 dollars people will be paying a premium for this company, already the PE ratio is getting uncomfortably high at 17-18 range and is way above all ords, so unless there is significant growth expected for this company, I don't think it deserves this PE ratio, but then investors are not always rational.

I think fundamentally, the company earnings will do well with coking coal slump easing and therefore raising thermal coal prices, albeit it will be a slow process and global demand for manufacturered goods hasn't truly picked up, and is predicted by many to be a slow and long process since people are now in a savings mentality.

Again I think if the share fall back to 2.00 - 2.50 it will be a good buy in the long term, the market condition isn't as grim as it was before. and I think with companies thats in the business of selling commodities, I think fundamental analysis is much more rational than technical.

 

[sidious]

CEY forum has been quiet for sometime. Though I look up on it and the comments by other ASF members. Kudos to Noirua for his insights and links to the coal price. It helped me a lot in investing and trading.

I hold CEY. This is my first share purchase ever. First it dropped 8% last January. I purchased a more when it dropped to 1.6 and 1.8. I've been tempted to sell when they released a report last April. But decided not to. I don't know why but maybe out of love. And with all the mergers and takeovers around, I'm betting that they are a target.

Sometimes I think why not FLX or MCC? But CEY is far more cheaper and I don't believe that coking coal will recover soon. At least, thermal coal will have a demand even if there is a recession.

Good luck to us all.

 

[sidious]

BTW, Xstrata's coal mine in the Hunter Valley will close this year according to reports. Would anybody have an insight as to the effect it would have to CEY? Thanks

 

[noirua]

BTW, Xstrata's coal mine in the Hunter Valley will close this year according to reports. Would anybody have an insight as to the effect it would have to CEY? Thanks

Hi sidious, As far as I know. The UCC mine is due to close in March 2010 and is positioned near Singleton to the North West of the Newcastle Port.
Centennial's mines are to the South West of Newcastle at Lithgow and South East at Newstan and near Mandalong. This is on a different rail line and should not effect the company.