WHC - Whitehaven Coal

[finicky]

@barney I don't follow it at all but it appears a low quality stock from comsec financial summary. On the other hand it might be due a couple of the good years it can have after a pathetic FY20. Trading at roughly a third of its NTA and has been very rewarding price-wise obviously when picked up at a major low. Good amount of cash in its assets and even for the poor FY20 had its interest costs twice covered by earnings.
Just looked at the daily chart to see what you meant and quite like the rounding low it made late August and September. I tend to rely on monthly and quarterly charts to get clues for a longer term bear stock.

 

[barney]

@barney I don't follow it at all

Yeah me either really.

I took an interest in it after picking it in the yearly Comp (When the SP was being beaten up), and it has continued down ever since

Even at a dollar per share its still a $1 Billion dollar Company however. Price of Coal will likely be the tell tale indicator for any sustained rebound.

 

[finicky]

Quarterly chart. A brave buy.

 

[sptrawler]

I haven't looked at them, but I would guess a lot depends on how much of its resources are thermal coal and how much metallurgical, thermal is on the nose but coking coal is still wanted.

 

[frugal.rock]

I am going to watch this one with interest.
My appetite for risk is fairly high and all I see is solid downtrend...
However, obviously, with all the talk and (some) systems starting to buy, maybe the bottom is in....
Can you see a coal company running up hard?
Meh...
"gas powered recovery"

 

[qldfrog]

I am going to watch this one with interest.
My appetite for risk is fairly high and all I see is solid downtrend...
However, obviously, with all the talk and (some) systems starting to buy, maybe the bottom is in....
Can you see a coal company running up hard?
Meh...
"gas powered recovery"

gas as long as it is dirt cheap, India China and actually most countries still burn coal like mad.in term of actual percentage of energy consumed yearly, coal remains the key source and green energies are peanuts.not a wish, just facts
a bit like your vogue fashion models, sadly, on the street, they are not that numerous even if omni presents on TV and news/papers.

the production cost being mostly fixed, any extra dollar increase in price is pure profit and the future is bright: look at the chart...
was purchased by my daily system at 1.02 on the 28/09

 

[finicky]

was purchased by my daily system at 1.02 on the 28/09

@qldfrog what was purchased @ 1.02, Whitehaven?
Sorry if I'm obtuse.

 

[finicky]

@sptrawler it might be on the nose amongst arts degree comfy people to whom it costs absolutely nothing to virtue signal but it seems it's being used undiminished by White haven customers. Not that I am wildly enthusiastic about that - it is what it is. They produce both thermal and metallurgical coal and apparently it is high quality and sells for a premium. I'm thinking of putting in a stink bid (@ 50c - the last major low) in case the recent ST low doesn't hold.

A couple of grabs from their website:

High-quality coal
Coal has been the fastest growing energy source over the last ten years and global demand continues to rise, especially in South East Asia.
Our coal helps power regional economies through its contribution to energy generation and steel production and is highly sought-after for its unique properties, including the fact it delivers among the lowest carbon emissions per tonne of coal consumed in the seaborne trade.

Their customer locations

 

[barney]

No better time to buy any stock than at the last low ...... Picking if it's the "last" is the trick of course!

Positions such as this look like low risk accumulation trades (in my opinion) Appropriate position sizing over a few entries should not risk the bank

 

[Miner]

Might discuss later if I watch the video clip again more closely. Interviewee seems to be saying that Whitehaven's thermal product is slightly cleaner than average metallurgical coal, can that be right?. Talks too fast for me. I've never made dollar out of an energy investment but I have lost heaps for my size as a punter. He makes some intriguing points, think he says that last time the real usd price of oil has been this low is the 1940's? - "If you're not buying oil now, you never will".

Chart of WHC defintely has prospects - the massive positive volume last month to make a small bodied candle after a long descent, for starters. For my purposes the long term chart has been following a two year descending channel and has recently come off the lower rail of that channel but there is not a clear monthly reversal candle yet in my book. August and September could easily turn out to be a tweezer pair bottom however. Price has reached the GFC level. I sort of hope WHC and WPL don't become more tempting because I always lose at energy and anyway I want to preserve cash.



WHC All Data Monthly
View attachment 112623

I have heard many Africana and Asian language personnel speaking English - this one is not audible because of his mike setting was poor.
Coming back to metallurgical coal and cleanliness are not related. I apologise for sounding expert here but not sure how many of us have had experience in operating and maintaining blast furnaces. Miner had. Metallurgical coal primarily used in blast furnace route of iron making from where the product (hot metal) goes to steel melting shops - various kinds there to make steel.

Metallurgical coals are normally of anthracite nature whereas mostly thermal coals are lignite. You can never make (if technology has changed in last 30 years - I am unsure) coking coal out of lignite coals. Burning metallurgical coal for generating power is a luxury similar to make your BMW 5 series for Uber. You can burn money the way you want, if have plenty. Coking coal is almost three times the price of thermal coal.

Please do remember metallurgical coal is burnt to form coking coal which is fed into blast furnaces. The strength of coking coal determines the burden strength and bla bla. Let me know digress here.

https://en.wikipedia.org/wiki/Metallurgical_coal - frankly I provided the link for better awareness and did not read even what is written in Wikipedia in this instance. It is primarily I was breathing with steel making - all sort for 12 years . Apology if I am sounding arrogant.
Metallurgical coal is determined from fixed carbon (carbon equivalent) .

Other parameters are sulphur, silica and phosphorous - a good metallurgical coal which has all three of very low value. Then comes strength of coal which is however taken care at coke ovens.

Thermal coal is cheap due to very high sulphur, low fixed carbon and higher value of silica - more gas and more ash.

The Coal Facts: thermal coal vs. metallurgical coal | Globalnews.ca

While metallurgical coal and thermal coal have similar geologic origins, their commercial markets and industrial uses are vastly different. This piece examines the primary differences between the two forms of coal.

globalnews.ca

If the claim is for cleaner coal that only comes from lower sulphur and lower silica - to get lower ash. Generally metallurgical coal will be deemed cleaner no matter if produced by WHC or any other company.
Oh yes, we produce best metallurgical coal from Newcastle in Australia. Back days if my memory is still active, Natal in Africa used to produce excellent metallurgical coal. But M/s Google says Australia and China are the largest producers of coking coal

The Coal Facts: thermal coal vs. metallurgical coal | Globalnews.ca

While metallurgical coal and thermal coal have similar geologic origins, their commercial markets and industrial uses are vastly different. This piece examines the primary differences between the two forms of coal.

globalnews.ca

Returning to WHC - for some reason when it was $2 the experts said buy buy - very low price. some how all brokers hyped WHC which is still a puzzle to me. Now it is around $1 and the buy sign is continuous. It could be very low price compared to few months back. Chartists can predict better if this is the bottom today.
But in generally world environmentalists are getting rid of coal fired units - the only solace is metallurgical coal. Would that source meaning China and India would enough to pop coking coal price up and up ??
YAL also makes coal and PE is 3.49 against WHC PE 34.3;
https://www.asx.com.au/asxpdf/20200819/pdf/44lp3vnpdqp72w.pdf - YAL performance
https://www.asx.com.au/asxpdf/20200826/pdf/44lxfbrc7nthth.pdf - whc performance
I have had WHC and sold out around $2. Would return to watch purely for making quick money if I can.

t

	WHC	YAL	ZEL	NHC	ERA
PRICE	1.080	2.010	2.560	1.290	0.160
MCAP	1.08bn	2.65bn	1.29bn	1.05bn	590.62m
YIELD	13.88%	15.7%	6.32%	11.86%	-
PE RATIO	34.830	3.490	-	-

 

[barney]

Thanks for the experienced insight @Miner So you are an old chimney sweep eh!!

 

[Miner]

Thanks for the experienced insight @Miner So you are an old chimney sweep eh!!

@barney - i give you 100/100 for calling me old. But not sure if I call myself a chimney sweep however. Back in uni days we used to call industrial engineering students as chimney , which I was/am not {}

 

[qldfrog]

@qldfrog what was purchased @ 1.02, Whitehaven?
Sorry if I'm obtuse.

Yes, WHC at 1.02 on the 28..
Sorry for the confusion

 

[qldfrog]

and for an update in term of bragging: BMA in the Bowen basin (met coal) has the best metallurgical coal in the world.
When met coal was getting very expensive, from memory, there were trial to use pulverized lower quality coal (aka thermal) in furnaces but i doubt this is still going on.
Met coal is a requirement for steel, so no coal no steel however many windmills and solar panels you have for the energy side.
Most of our production in Australia is met coal, a point fully voluntarily missed by the green brigade
as for WHC shares, I just follow the system

 

[Dona Ferentes]

There's an extensive interview in the AFR with CEO Paul Flynn:

Whitehaven boss strives to find light in coal's tunnel

After a tough year, Paul Flynn hopes some pause and reflection will enable the coal miner to earn the right to grow again.

www.afr.com

He is essentially optimistic about the coal price when looking at WHC production statistics; the rally in thermal coal pricing ($US50 to 58) has brought some momentum back, as has the AUD retreating a bit. These two tailwinds have held off any dilutive equity raising that might have been needed to survive the downturn.

"Our .. position at the time of the .. [August] results was about $470 million in combined liquidity,'' said Flynn. ''Pricing has improved since that time so that just adds further liquidity to the bank, so we feel very good about it. We have said from the beginning we didn't think an equity raising was necessary, and we certainly don't think that now. "I do feel like we have seen the worst of it, I feel like the balance of risks now are to the good rather than to the bad. ''I think the momentum we have carried into this new year is far better than what we carried into last year.''

Flynn has run Whitehaven for almost eight years, and says that after an era of rapid growth, the time had come for Whitehaven to pause and reset before considering any further growth [with management changes, better planning, more focus on process and "execution discipline''[unit costs which have risen 34 per cent over the past four years].

''The foundation of the business was smaller assets [which were] easy to manage, but we have openly acknowledged that our future is larger scale, more efficient operations. ''The type of skills you need to manage those smaller operations are vastly different from the ones you need as the scale and complexity of your business grows.''

Flynn expects there will be more consolidation in the Australian coal sector, but vows to remain disciplined and focused on shareholder value.

''We do think our business would be better balanced with a 50/50 split [between thermal coal and coking coal], but we are fortunate with our existing thermal assets that demand is very good.'' he says.

NSW thermal coal assets will be the backbone of Whitehaven's business for the forseeable future, meaning Flynn has little choice but to continue being corporate Australia's loudest advocate for coal's place in a carbon-constrained future. It's a role he is happy to take on, and he welcomes the NSW's government's recent "Future of Coal Statement" and the federal government's declaration in September that carbon capture and storage (CCS) is one of six technologies deemed a priority for investment. The NSW statement openly speaks of a ''transition away from coal'' to "new energy sources", but notes that the gradual pace of change means the local industry has several decades of life ahead of it.

One factor that has strained public discourse in Australia over coal's future has been the disconnect between cultural ties to developed nations in Europe and business ties to Asia. For every environmentally focused policy reform in Europe, Australian coal miners point to new power stations being built in Asia, where the vast majority of Australian thermal coal is sold.

 

[Miner]

There's an extensive interview in the AFR with CEO Paul Flynn:

Whitehaven boss strives to find light in coal's tunnel

After a tough year, Paul Flynn hopes some pause and reflection will enable the coal miner to earn the right to grow again.

www.afr.com

He is essentially optimistic about the coal price when looking at WHC production statistics; the rally in thermal coal pricing ($US50 to 58) has brought some momentum back, as has the AUD retreating a bit. These two tailwinds have held off any dilutive equity raising that might have been needed to survive the downturn.

Flynn has run Whitehaven for almost eight years, and says that after an era of rapid growth, the time had come for Whitehaven to pause and reset before considering any further growth [with management changes, better planning, more focus on process and "execution discipline''[unit costs which have risen 34 per cent over the past four years].


Flynn expects there will be more consolidation in the Australian coal sector, but vows to remain disciplined and focused on shareholder value.
NSW thermal coal assets will be the backbone of Whitehaven's business for the forseeable future, meaning Flynn has little choice but to continue being corporate Australia's loudest advocate for coal's place in a carbon-constrained future. It's a role he is happy to take on, and he welcomes the NSW's government's recent "Future of Coal Statement" and the federal government's declaration in September that carbon capture and storage (CCS) is one of six technologies deemed a priority for investment. The NSW statement openly speaks of a ''transition away from coal'' to "new energy sources", but notes that the gradual pace of change means the local industry has several decades of life ahead of it.

One factor that has strained public discourse in Australia over coal's future has been the disconnect between cultural ties to developed nations in Europe and business ties to Asia. For every environmentally focused policy reform in Europe, Australian coal miners point to new power stations being built in Asia, where the vast majority of Australian thermal coal is sold.

BTW Paul has put the money by buying good volume of shares off late.

 

[Dona Ferentes]

BTW Paul has put the money by buying good volume of shares off late.

Probably a sensible pathway; to follow the money. I get the feeling not having that 'dilutative capital raising' that other coal companies were having achieved two outcomes and then buying (assuming that was the sequence); blow -off the shorters, and restore shareholder confidence.

 

[finicky]

Up ^7% on firm volume so far today and surely price has now broken out from the most severe downtrend line you could draw?

3 Year Daily

 

[wayneL]

I've been dipping my toe into whc along with a few other coal companies. Of course with the benefit of 2020 hindsight I should have bought a whole bunch more.

But what I like to do in the commodity scene is try to find where minimum value might be and the price of thermal coal certainly seems to have fitted this criterion as far as I can see and the last few weeks and months.

Add to that the "on the nose" status of coal itself and I think coal companies offer a pretty good leveraged opportunity on the underlying price of coal.

In my opinion, despite all the green rhetoric, coal-based energy production is not going anywhere anytime soon.

Great opportunity here and in other coal companies in my humble opinion.

 

[finicky]

Friday, 27th November 2020

Which shares excelled?

"There was a resurgence among coal stocks this week, despite Australian coal exports to China slumping 21% in October. In addition, investors were unperturbed with the fact that there are currently around 80 coal ships stuck off the coast of China amid diplomatic tension between the two nations.

Nonetheless, sentiment was on the up amid the broader rally, and with this sector previously hit hard, the rebound spurred on the likes of Coronado Global Resources (ASX: CRN), New Hope Corporation (ASX:NHC), Whitehaven Coal (ASX: WHC) and Yancoal (ASX: YAL)."

10 Yr Mthly